South32 Mozal aluminium smelter review signals power risk

South32

South32 Mozal aluminium smelter review addresses severe electricity uncertainty in Mozambique. South32 Mozal aluminium smelter review includes a likely value write-down. South32 Mozal aluminium smelter review could trigger a production halt by March 2026.

Mozal faces expiring power contracts with HCB and Eskom in March 2026. The 580,000 t/yr smelter remains exposed to unresolved tariff and supply terms. Therefore, management will reassess the 2025–26 production target and asset value.

Power contract risk and production outlook

Negotiations with HCB, Eskom, and the government have dragged for six years. As a result, South32 warns of a potential shutdown if no deal emerges. The company expects a partial write-down in 2024–25 financial results. Meanwhile, civil unrest forced guidance withdrawal in late 2024. South32 later reset guidance to 350,000 t on an equity basis. It produced 314,000 t in 2023–24 on the same basis.

Mozal’s review spans cash costs, curtailment plans, and capex timing. However, firm terms could still stabilize output through 2026. Immediate focus remains contract certainty and reliable hydropower allocation. Therefore, customers should prepare for supply variability and lead-time changes.

Market context and global smelter pressures

Aluminium smelters consume massive power and face volatile tariffs. Similar pressures hit Rio Tinto’s Tomago and Tiwai Point sites. Energy costs and grid constraints drive curtailments and policy requests. Consequently, price risk and carbon strategies shape smelter competitiveness.

Downstream buyers weigh premiums, logistics, and ESG footprints. Secure contracts can de-risk billet and slab availability. Therefore, procurement teams should diversify sources and hedge exposures now.

The Metalnomist Commentary

Power certainty will decide Mozal’s utilization and margin path. A bankable contract could avoid curtailment and protect regional employment. Watch tariff structure, indexation clauses, and contingency planning through 2026.