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.
South32 expects ongoing care and maintenance costs of about US$5 million a year, following termination of staff and contracts, and after booking a US$372 million impairment in the 2025 financial year due largely to ageing assets.
The company said there would be no job impacts at its Western Australian mining operations or the Worsley Alumina refinery, which supplies Mozal, and it has already secured new customers to sell alumina at index-linked prices.
Mozal's output was previously guided to fall to 240,000 tonnes in FY26.
South32 owns 63.7% of Mozal, alongside South Africa's Industrial Development Corporation and the Mozambican government.