On December 16, 2025, South32, the Australian mining giant, officially announced that Mozal Aluminum Smelter in Mozambique – Africa’s second-largest electrolytic aluminum plant – will enter indefinite “care and maintenance” (de facto shutdown) starting March 15, 2026 . The six-year-long negotiations over electricity supply have collapsed, marking a critical turning point for global aluminum supply chains and trade dynamics.
1. Core Facts: Why Mozal’s Shutdown Is Inevitable
Key Plant Profile
① Capacity & Status: Designed annual capacity of 750k tons, with actual output of 560k-580k tons (accounting for 0.7%-0.8% of global aluminum production) . It is Mozambique’s largest industrial employer and top export contributor.
② Ownership: South32 (63.7%), South African Industrial Development Corporation (32.4%), Mozambican Government (3.9%) .
③ Economic Impact on Mozambique: Contributes 3% of national GDP, 10% of total exports (US$800M-1.1B/year), and directly employs 5,000 workers .
The Fatal Standoff: Electricity Price Dispute
After six years of negotiations, South32 and Mozambican authorities failed to reach a new power supply agreement (expiring in March 2026). The core deadlock lies in electricity pricing:
| Stakeholder | Demanded Tariff | Rationale |
| South32 | ≤ US$70/MWh | Electricity accounts for 30%-40% of aluminum production costs; higher tariffs would push the plant into permanent losses . |
| Mozambican Gov’t | US$91/MWh | Needs funds for energy infrastructure; insists on a “fair price” for national resources . |
Additional Risk Factors
① Power Supply Shortage: Drought reduced output at Cahora Bassa Hydroelectric Dam (HCB), which supplies 80% of Mozambique’s electricity .
② Political Instability: Post-election protests in late 2024 disrupted raw material transportation, eroding investor confidence .
③ Supply Model Shift: The government mandated state-owned EDM as the sole power supplier, replacing HCB and adding uncertainty .
2. Global Aluminum Market Impact: Supply Gap & Price Dynamics
Supply Shortage Takes Shape
Mozal’s shutdown will cut global aluminum supply by ~580k tons in 2026, turning the previously projected 200k-ton deficit into a 600k-ton gap . For the EU – Mozal’s top export market – this means a 400k-ton import shortfall, further tightening regional supply .
Price Trajectory: Bullish Momentum to Continue
① Current Trend: LME Aluminum prices have surged past US$3,000/ton, driven by pre-shutdown supply concerns .
② Institutional Forecasts: Analysts predict prices could break US$3,200/ton by Q2 2026 if other high-cost plants (e.g., U.S. Massena, Australian Rio Tinto smelters) face similar shutdown risks .
③ Regional Premiums: Japan’s Q1 2026 aluminum premium already rose 126.7% YoY to US$195/ton (CIF), reflecting Asian spot tightness .
3. Implications for Aluminum Traders & Manufacturers
Urgent Actions to Mitigate Risks
① Lock in Supply Contracts Early: Secure long-term deals with alternative producers in Indonesia, the Middle East, or South America to avoid price spikes .
② Adjust Pricing Strategies: Embed index-linked clauses in export contracts (e.g., LME price + regional premium) to offset cost volatility .
③ Diversify Sourcing Channels: Explore Chinese overseas aluminum projects (e.g., Nanshan Aluminum’s Indonesia plant) or Middle Eastern capacity (powered by cheap natural gas) .
Long-Term Opportunities
① Green Aluminum Demand: As high-carbon, energy-intensive plants shut down, low-carbon aluminum (powered by renewables) will gain competitive advantages in EU/US markets .
② Supply Chain Resilience: Invest in regional warehousing or dual-sourcing models to avoid disruptions from single-region outages .