South32 Ltd. faces uncertainty over its Mozal aluminium smelter
South32 Ltd. (ASX: S32) announced that its Mozal aluminium smelter in Mozambique will be closed in March 2026. The decision follows prolonged discussions between the company and the Mozambican government.
Background
Mozal is a joint‑venture aluminium smelter that has been a significant part of South32’s aluminium business. The plant has contributed substantially to the company’s revenue from alumina, aluminium, and related products. South32’s 2026 share price closed at AUD 4.55, well below the 52‑week high of AUD 4.80 and the 52‑week low of AUD 2.47. The firm’s market capitalisation stands at approximately AUD 20.5 billion, with a price‑earnings ratio of 45.85.
Government response
On 9 February 2026, Mozambique’s Minister of Mineral Resources and Energy, Estevão Pale, stated that the government was “doing everything that is required” to keep the Mozal smelter operational. The minister spoke at a conference in which he emphasized that the plant is a critical source of employment and foreign exchange for the country. Despite the minister’s assurances, South32 has indicated that it will proceed with the March closure unless a viable financial arrangement can be secured.
Implications for South32
The potential shutdown of Mozal could impact South32’s aluminium production capacity and cash flows. The company’s diversified portfolio includes alumina, coal, manganese, nickel, silver, lead, and zinc; however, the loss of a major smelter may affect the company’s ability to serve global aluminium markets. Analysts note that the company’s price‑earnings ratio suggests investors are pricing in significant future growth, but the uncertainty surrounding Mozal could lead to short‑term volatility.
Market reaction
Australian shares rebounded on 9 February, led by miners and banks, as investors prepared for a week of corporate earnings. The S&P/ASX 200 index rose 1.5 % to 8,840.50 by 2312 GMT. While the broader mining sector benefited from the rebound, South32’s specific situation remains a focal point for market participants.
Outlook
South32’s management has stated that it will continue to engage with Mozambican authorities to seek a solution that allows the smelter to remain operational. Until a definitive agreement is reached, the company’s share price may remain sensitive to developments at Mozal. The outcome will likely influence not only South32’s financial performance but also the broader Australian metals and mining sector.
