South32 (ASX:S32) will mothball its Mozal aluminium smelting operations in Mozambique from March 2026 at an estimated cost of about US$60 million after failing to secure a sustainable electricity pricing agreement with local authorities, ending years of negotiations amid worsening drought conditions.
The Perth-headquartered miner disclosed the decision to the ASX on Dec. 16, confirming an outcome it had flagged as increasingly likely in August.
CEO Graham Kerr said Mozal's continued operation depended on access to sufficient electricity "at a price which allows the smelter to remain internationally competitive", but talks remained deadlocked, exacerbated by drought affecting supply from Hidroeléctrica de Cahora Bassa, Mozambique’s main hydro-electric producer.
Power constraints and pricing disputes involving the Mozambican government and South African utility Eskom ultimately forced the company to shift focus to placing the smelter on care and maintenance, with Mozal scheduled to be switched off on March 15.