Miningweb: Eskom dispute could close South32 Mozam aluminium smelter, 2nd biggest in Southern Hemisphere

Key topics:Closure of Mozal smelter threatens 37,000 jobs and 30% of exportsPower tariff dispute at heart of shutdown risk with Cahora Bassa and EskomCTA urges concessions if Mozal boosts local supply and domestic output.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Tavares Cebola and Matthew Hill.The possible closure of South32 Ltd.’s aluminium smelter in Mozambique, the second-largest in the southern hemisphere, could put about 37,000 jobs in jeopardy and wipe out nearly a third of the the nation’s exports, a local business lobby group warned. The company said this month it may close the plant near the capital, Maputo, in March, when its electricity purchase deal expires, as it hasn’t been able to negotiate an acceptable agreement to replace it. The abrupt termination of contracts with about 20 local suppliers has already impacted around 1,000 jobs, the Confederation of Economic Associations of Mozambique said in statement Tuesday. The CTA, as it’s known, said the planned shutdown is “unacceptable.” It would deal a fresh blow to Mozambique’s economy, still reeling from months of deadly-post election protests and trigger a $372-million write-down for South32..Read more:.Steel closures threaten South Africa’s $257bn infrastructure plan.At the center of the dispute is a three-way power arrangement. Mozambique’s hydropower plant Cahora Bassa sells electricity to neighbouring South Africa’s utility, Eskom Holdings SOC Ltd., which in turn supplies the Mozal smelter. Cahora Bassa sells power to Eskom at about $0.06 per kilowatt hour, while Mozal’s operator has proposed paying no more than $0.038, according to a document seen by Bloomberg and verified by a Mozambican official. The proposal, if adopted, would harm the hydroelectric operator’s cash flows and risk profile, it said. The document also highlights Mozal’s limited fiscal contribution to Mozambique, noting it only pays a 1% royalty and no income tax. In the 2024 financial year, it paid $7 million in royalties and $6 million in dividends to the state, according to South32’s latest Tax Transparency and Payments to Governments Report.Still, CTA urged the government to consider electricity tariff concessions for Mozal, provided that it reserves 40% of its output for domestic companies to process, and “substantially” increases the number of local suppliers..© 2025 Bloomberg L.P.

Miningweb: Eskom dispute could close South32 Mozam aluminium smelter, 2nd biggest in Southern Hemisphere

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