What You Need to Know
South32 Ltd. has idled its Mozambican aluminium smelter, the largest supplier to Europe, due to failed power supply negotiations. This closure tightens global aluminium supplies and significantly impacts Mozambique’s economy, which relies on the smelter for export earnings and economic output. The situation is exacerbated by rising electricity prices and supply issues in South Africa.
Africa-Press – Mozambique. South32 Ltd. idled its Mozambican aluminium smelter, Europe’s biggest source of the metal, after talks failed to secure an affordable power supply deal beyond this month, tightening global supplies just as the Iran war prompted Bahrain to curtail output at the world’s biggest facility.
South32 Ltd. idled its Mozambican aluminium smelter, Europe’s biggest source of the metal, after talks failed to secure an affordable power supply deal beyond this month, tightening global supplies just as the Iran war prompted Bahrain to curtail output at the world’s biggest facility.
South32 confirmed in a statement on Monday that it had placed the 25-year-old operation on care and maintenance. Aluminum prices this month have soared to the highest since 2022.
The Mozal smelter, located outside the capital Maputo, accounted for about one-fifth of Europe’s raw aluminum imports last year, according to official trade data from Eurostat. It also made up around 2% of Mozambique’s economic output, and nearly 20% of the southeast African nation’s export earnings.
The plant’s idling ratchets up uncertainty in global aluminium markets already struggling with cutbacks at Bahrain’s smelter. For Mozambique, it’s a major blow to an economy that’s already reeling and a government facing a deep fiscal crunch.
South African electricity utility Eskom sells power to Mozal that it in turn sources from the Cahora Bassa hydropower plant located in Mozambique. Energy-intensive industries in both countries are struggling to remain viable as preferential-pricing deals that originally attracted them expire.
Rising electricity prices and inconsistent supply have seen many of South Africa’s 66 smelting operations close, with only 11 of them still working.
South32 holds 63.7% of Mozal, with South Africa’s Industrial Development Corp. owning 32.4%, and the Mozambican government the rest.
The alumina supplied from the Worsley refinery in Australia to Mozal will now be sold to third-party customers at index-linked prices.
The Mozal smelter, operational for 25 years, has been a crucial part of Mozambique’s economy, contributing significantly to export earnings and GDP. Its closure comes amid broader challenges in the region, including rising energy costs and the expiration of favorable pricing agreements, which have affected many smelting operations in South Africa and Mozambique alike. The idling of this facility marks a significant shift in the aluminium market, particularly for Europe, which has relied heavily on Mozambican supplies.
