South32 faces impairment at Mozal Aluminium smelter

SOUTH32 will report an impairment from its Mozal Aluminium Smelter in Mozambique due to a inability to negotiate a new electricity agreement over a six-year period.

- EDWARD WEST

The announcement appeared to send South32's share price reeling on Monday, with its price down by 5.8% to R34.42. A year ago, the share was trading at R44.75.

South32 said in a statement on Monday that its production guidance from the plant was under review, and an associated impairment expense would be recognised in the 2025 financial results.

Electricity is supplied to Mozal under an agreement that expires in March 2026.

Historically, the majority of electricity for Mozal has been generated in Mozambique by the hydroelectric power generator, Hidroeléctrica de Cahora Bassa (HCB), owned by the Mozambique government. Under the agreement, electricity from Eskom is supplied to Mozal when HCB is unable to meet all of Mozal's requirements.

"We have been working with the government of Mozambique, HCB, and Eskom for the last six years to secure electricity supply to Mozal beyond March 2026. To date, Mozal has been unable to agree to an affordable electricity price tariff," South32 said.