South32 warns no way back for Mozal after March shuttering

SOUTH32 was “ready and willing” to resume discussions on a new power tariff for its Mozal aluminium smelter scheduled to close in March, but it also warned the facility would not reopen once closed.“The hard thing is that with a smelter, once you put a smelter in care and maintenance, whilst it is possible to restart, it’s super expensive,” said Graham Kerr, CEO of South32 in an interview on Thursday. “It’s probably a three- to four-year journey.“My belief is: if you shut Mozal, you never start it again. It’s just too hard.” An estimated 5,200 jobs could be affected if the smelter closes as well as hundreds of suppliers, many of them South African.Shares in the Perth-headquartered company fell 6.7% in Johannesburg after it announced earlier today its intention to mothball Mozal, a 370,000-tons-a-year aluminium smelter in Mozambique, and absorb a $372m impairment against its financial 2025 results. The decision resulted from South32 being unable to secure “sufficient and affordable” electricity beyond March 2026, when the smelter’s current power supply contract ends.Discussions between Hidroeléctrica de Cahora Bassa, the power utility, and South32 had been under way for six years. The current arrangement is for about 950MW, predominantly from Cahora Bassa, at a rate that inflates with Mozambique’s national PPI.Mozambique’s offer, however, was to supply only 350MW – owing to capacity problems due to a two-year drought – for double the current tariff. This was a proposition Kerr said South32 could not absorb. “If you think about the cost structure of a smelter, it’s about a third electricity. If someone’s going to come in and roughly double your electricity price, you just don’t have a business,” he said.Whilst negotiations are confidential, Kerr said that a competitive tariff for a company that might be struggling would be $50 per kilowatt-hour (kWh). This compares to HCB’s stated cost of production of between $17 and $19 per kWh.“In fact, I think in 2024, they (HCB) publicly called out in their annual report that they made record profits. They made record profits on the back of repricing their export sales and their long-term contracts,” he said.An added complication for South32 is that even with a competitive, long-term power supply agreement with Mozambique, it would have to source the shortfall in supply – up to 550MW – from South African power utility, Eskom. While South32’s relationship with Eskom was sound, there could be no advance on a power supply agreement until a base had been secured with Mozambique, said Kerr.Mothballing Mozal, which has been operating since the nineties, was “a statement of the seriousness of the situation,” he added. “It’s certainly not a negotiating ploy.“We’ve been in discussions for six years now, and I know things never move super fast in this part of the world. But the one thing we’ve been consistent about for a period of time is: an aluminium smelter is not a mine. You can’t just stop it, suspend it. No electricity, no business.”The post South32 warns no way back for Mozal after March shuttering appeared first on Miningmx.Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.comWeiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com