WeeklySA_AdminSETBACK: The shutdown of Mozambique’s Mozal aluminium smelter places more than 4 000 jobs at risk, raising concerns in South Africa over regional economic stability and the future of one of the country’s key cross-border industrial investments…
By Own Correspondent
Australian mining giant South32 has revealed that the closure of Mozambique’s Mozal aluminium smelter has already cost the company an estimated $117 million (R1.9 billion), while placing more than 4,000 direct and indirect jobs at risk in one of Southern Africa’s most significant industrial setbacks.
The latest financial results, released as part of South32’s quarterly report, underscore the human and economic cost of the shutdown, which has not only devastated employment prospects in Mozambique but also carries implications for South African investors and the regional economy.
The Industrial Development Corporation (IDC) of South Africa, which owns a 32.48% stake in Mozal, has already begun exploring options to rescue the smelter by appointing consultants to assess the feasibility of acquiring South32’s majority holding and restarting production. Mozal, located outside Maputo, was one of Africa’s largest aluminium smelters and one of Mozambique’s biggest exporters, earning billions in foreign exchange while supporting thousands of families through direct employment and contractor work.
According to South32, the shutdown has resulted in $33 (R555m) million in severance and contract termination costs, while a further $89 million has been written off in raw materials, consumables and inventory after the operation was placed on care and maintenance on 15 March.
Production for the financial year ended 30 June fell by 30%, from 355 000 metric tons to 248,000 metric tons, while aluminium sales declined 22%, from 351 000 tons to 275,000 tons.
During the April-to-June quarter—the first full quarter after operations ceased—the smelter produced no aluminium, relying solely on the sale of 46,000 tons of existing inventory.
The closure followed months of unsuccessful negotiations over electricity tariffs needed to keep the energy-intensive plant operating.
South32 argued that the proposed tariff of almost $100 (R1 680) per megawatt-hour was commercially unsustainable, nearly double the price the company believes would allow the smelter to remain viable.
Former chief executive Graham Kerr previously said the company had sought a long-term electricity price closer to $51 (R859) per megawatt-hour, noting that electricity accounts for roughly a third of Mozal’s operating costs.
The smelter requires approximately 950 megawatts of uninterrupted electricity, historically supplied by Mozambique’s Hidroeléctrica de Cahora Bassa (HCB) through South Africa’s Eskom transmission network under a power agreement that expired in March. South32 also cited drought conditions affecting the Cahora Bassa dam as a contributing factor to reduced regional power availability.
Although South32 has said it remains open to restarting Mozal if electricity prices and broader economic conditions improve, uncertainty over the smelter’s future has grown after the company announced the sale of several global aluminium assets to U.S.-based Alcoa Corporation for up to $5.6 billion. (R94bn) Mozal was excluded from that transaction and remains under South32’s ownership while the company considers its long-term options.
For South Africa, the stakes extend beyond its investment through the IDC. Mozal has long been regarded as a cornerstone of regional industrial integration, with supply chains, logistics networks and electricity infrastructure linking the economies of Mozambique and South Africa.
The IDC’s ongoing assessment of a possible acquisition reflects growing recognition that preserving Mozal is not only about protecting thousands of Mozambican livelihoods but also about safeguarding one of Southern Africa’s most strategic industrial assets. – Lusa
