Global mining giant South32 (ASX:S32) placed its Mozal Aluminium smelter on "care and maintenance" as of March 15, marking a significant shift in the region's industrial landscape.
The decision follows years of extensive negotiations between South32, the Government of the Republic of Mozambique, and energy provider Eskom.
The company was unable to secure a sufficiently affordable and reliable power supply to sustain operations beyond the first quarter of the year.
South32 CEO Graham Kerr expressed regret over the closure, noting that while it was not the preferred outcome, the company remains proud of Mozal’s 25-year history and its contribution to the local economy.
The transition to care and maintenance involves substantial financial implications; one-off costs, including employee redundancy packages and the termination of third-party contracts, are estimated at approximately US$60 million.
Moving forward, the site will incur ongoing annual maintenance costs of roughly US$5 million to preserve the infrastructure.
The impact of the suspension ripples through the company's global supply chain.
Alumina previously destined for Mozal from the Worsley Alumina refinery in Australia will now be redirected to third-party customers at index-linked prices.