South32 has idled its Mozal aluminium smelter in Mozambique, the second-largest in the southern hemisphere, after failing to secure an affordable power supply beyond March 2026, marking a significant blow to the region’s industrial output. The company announced the operation was placed on care and maintenance, with employee separation costs estimated at $60 million.
Negotiations with the Mozambican government and South Africa’s state-owned utility Eskom spanned six years, yet no viable solution emerged for the smelter located near Maputo. Eskom supplies power to Mozal from the Cahora Bassa hydropower plant in Mozambique, but rising electricity prices and expiring preferential pricing deals have crippled energy-intensive industries across the region. South32 holds a 63.7% stake in Mozal, with the remainder owned by South Africa’s Industrial Development Corp and the Mozambican government.
Compounding the challenges, South32 will redirect alumina from its Worsley refinery in Australia to third-party customers at index-linked prices, adapting to the shutdown’s impact on its supply chain.
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Meanwhile, Aluminium Bahrain (Alba), operator of the world’s largest single-site aluminium smelter, has suspended 19% of its production capacity due to supply chain disruptions in the Strait of Hormuz. This equates to a substantial cut in output, given Alba’s annual capacity exceeds 1.5 million metric tonnes, a move that could tighten global aluminium markets already under strain.
The phased shutdown at Alba, initiated in recent days, aims to conserve raw material stocks amid escalating geopolitical tensions in the critical maritime chokepoint. With no clear timeline for resuming full capacity, the decision underscores the vulnerability of industrial giants to regional instability, especially for those reliant on imported inputs traversing volatile shipping lanes.
Global aluminium prices have already reacted, with futures contracts on the London Metal Exchange for Q2 2026 delivery climbing nearly 3% over the past week. The combined effect of South32’s closure and Alba’s curtailment signals mounting pressure on downstream industries like automotive and construction, where demand for aluminium remains strong.
South Africa’s own smelting sector offers a grim parallel, with only 11 of 66 facilities still operational due to similar power cost and supply issues. South32’s Mozal closure, announced on March 15, 2026, adds another layer of complexity to an already challenged regional industrial landscape.
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