Power Dispute Forces Shutdown of Africa’s Second-Largest Aluminium Smelter, Raising Economic Alarm
Operations at one of Africa’s most critical industrial assets have ground to a halt, as South32 Ltd announces the suspension of its Mozal aluminium smelter in Maputo. The facility, recognized as Africa’s second-largest aluminium smelter, has been placed on care and maintenance following a prolonged and unsuccessful battle over electricity pricing.
The shutdown marks a significant turning point not only for the company but also for Mozambique’s industrial landscape. At the heart of the crisis lies a six-year deadlock involving South32, the Mozambican government, and Eskom Holdings SOC Ltd over securing affordable and sustainable power for the energy-intensive operation.
South32’s Chief Executive Officer, Graham Kerr, described the outcome as deeply disappointing, confirming that the company has transitioned the smelter into a non-operational state. The decision comes with a heavy financial toll, including an estimated $60 million in employee separation costs, underscoring the human and economic weight of the closure.
The Mozal smelter, a cornerstone of Mozambique’s export economy, has long relied on electricity sourced through Eskom, linked to the Cahora Bassa hydroelectric system. However, with the expiration of preferential power pricing agreements, the plant’s operational viability has come under severe strain. Rising tariffs and inconsistent electricity supply have increasingly made large-scale smelting operations unsustainable across the region.
The situation reflects a broader regional crisis. In South Africa, for instance, only 11 out of 66 smelting facilities remain operational, an alarming indicator of how energy challenges are reshaping heavy industry across Southern Africa.
Ownership of Mozal further highlights its strategic importance. While the Mozambican government holds a controlling 63.7% stake, South Africa’s Industrial Development Corporation owns 32.4%, reinforcing the cross-border economic implications of the shutdown.
Despite efforts to keep operations afloat, warning signs had been evident for months. As early as August last year, South32 signaled the plant could become unviable under new electricity tariffs set to take effect in 2026. Rob Jackson previously disclosed that negotiations had reached a stalemate, making the current shutdown an anticipated, though still devastating, outcome.
The ripple effects are expected to be severe. Approximately 2,500 workers and contractors now face job uncertainty in a country already grappling with high youth unemployment. The economic stakes are equally stark: aluminium ranked as Mozambique’s third-largest export, generating $1.1 billion last year, entirely from Mozal’s output.
South32 has already taken a financial hit, recording a $372 million write-down tied to the potential closure. Meanwhile, the shutdown could free up roughly 950 megawatts of electricity, raising critical questions about how that capacity will be redistributed in a region plagued by chronic power shortages.
Read alsoSouth African rand Gains Momentum Ahead of Key Economic Data Releases
As Mozambique confronts the fallout, the Mozal shutdown serves as a stark warning: without sustainable energy solutions, even the continent’s most strategic industrial giants remain vulnerable.
