Maputo, Aug. 14, 2025 (Lusa) - Aluminium smelter Mozal, Mozambique’s largest industrial company, announced on Thursday that it will cut investment and lay off contractors, maintaining only operations until March 2026, when its electricity supply contract expires, citing a lack of guarantees for continued operation.
In a market statement released today, seen by Lusa, the Australian group South32, which operates the aluminium plant on the outskirts of Maputo, said it has been in talks with the Mozambican government, Hidroeléctrica de Cahora Bassa (HCB), and South Africa’s Eskom – which buys electricity from HCB and sells it to Mozal – “to secure sufficient and affordable electricity” to “enable operations beyond March 2026, when the current [energy supply] contract expires.”
However, the commitments made so far “do not give Mozal” the “assurance of having sufficient and affordable electricity beyond March 2026.”
“As a result, we will limit investment in Mozal, halting the relining of pots and deactivating the associated contractors from this month,” the statement reads, noting that the plant is expected to be placed under “care and maintenance” at the end of the current contract.
Mozal purchases nearly half of all electricity produced in Mozambique and is estimated to account for around 3% of the country’s Gross Domestic Product (GDP).
The statement adds that Mozal’s output in the 2026 financial year is expected to be approximately 240,000 tonnes, “reflecting the reduced number of operating pots,” due to the immediate suspension of the pot relining process and because “operations will only continue until March.”
In the same statement, which describes “the most likely scenario” as Mozal “operating until the end of the current electricity supply contract and then being placed in care and maintenance,” the group also recognised an “impairment loss” of 372 million US dollars (€318.3 million).
On 15 July, the Mozambican government assured that the electricity supply to Mozal was not at risk, but that it intended it to be provided by the state-owned utility Electricidade de Moçambique (EDM).
“It is in our interest that Mozal continues to have sufficient power (…) It is also the Government’s interest that the entity supplying the electricity be EDM,” said the Council of Ministers’ spokesperson, Inocêncio Impissa, adding: “At present, the contracting is done directly, and the aim is to introduce the ‘player’ EDM, which is the entity responsible for marketing the electricity produced by our hydroelectric plant [HCB]. There are elements that need to be finalised for this to happen.”
Electricity supply to Mozal is currently handled by South Africa’s Eskom, which in turn buys power from HCB – accounting for 66% of total production in 2024 – located in central Mozambique. However, the Mozambican government intends to change this arrangement.
On 23 June, the President of Mozambique confirmed that in 2030 the process of energy reversion will go ahead, ending the contract under which electricity produced in Mozambique has been supplied to Eskom since 1979.
“This year, 2025, in addition to implementing rehabilitation projects, HCB, with a view to the energy reversion planned for 2030 – when Mozambique will take control of its energy generation with the end of the Eskom contract – must consolidate its role in Mozambique’s energy development,” said Daniel Chapo, confirming the intention already signalled by the previous government.
In February 2024, Lusa reported that the Mozambican government intends, from 2030, to “repatriate” for domestic use the electricity that has been exported from HCB to South Africa since 1979, in line with the country’s Energy Transition Strategy up to 2050.
The document sets this goal for 2030: “The main short-term hydropower priority is the repatriation of HCB electricity currently exported to South Africa (8–10 TWh), as well as the addition of 2 GW of new national hydroelectric capacity by 2031.”
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