Business News - Mozambique: Mozal produced 248,000 t.

Mozambique's aluminium sector faced a watershed moment in early 2024 as Mozal, the country's flagship smelter and Africa's largest aluminium producer, wound down operations ahead of a complete closure in March. The facility produced just 248,000 tonnes in the months leading to shutdown—a stark indicator of the operational and financial pressures that have crippled one of southern Africa's most strategically important industrial assets.

Mozal's troubles reflect deeper systemic vulnerabilities in Mozambique's energy and infrastructure landscape. The smelter, a joint venture between Mitsubishi Materials, Itochu, Sumitomo Chemical, and Japan's South Africa-based Billiton, consumes approximately 5% of Mozambique's total electricity output—a massive draw that became unsustainable as the country's energy crisis deepened. The facility's closure eliminates roughly $2 billion in annual export revenue and displaces over 1,000 direct employees, alongside thousands of indirect jobs in logistics, supply chain, and support services.

## Why Did Mozambique's Aluminium Giant Fail?

The immediate trigger was power supply instability. Hidroelétrica de Cahora Bassa (HCB), the hydroelectric complex supplying Mozal, faced severe water stress as Cahora Bassa reservoir plummeted to critically low levels. Unlike the recent recovery in reservoir capacity—now stabilising after historic lows—the damage to investor confidence was irreversible. Mozal operators calculated that continued operation during energy scarcity would incur unsustainable losses, forcing the decision to suspend smelting operations indefinitely.

Beyond energy, Mozambique's political instability and currency depreciation (the metical lost over 30% of value in 2023) eroded operational margins further. Import costs for raw materials and spare parts surged, while export revenues in depreciating currency contracted. Combined with mounting debt servicing obligations and delayed infrastructure investment, the economics of aluminium production became untenable.

## What Does Mozal's Closure Mean for Regional Investment?

The shutdown is a cascading signal to international capital markets: Mozambique's infrastructure cannot reliably support energy-intensive manufacturing. Mozal's exit does not occur in isolation—it follows Sasol's decision to divest from the Temane gas fields and underscores investor hesitation around Mozambique's broader resource sector.

However, the stabilisation of Cahora Bassa reservoir levels offers a conditional lifeline. If hydroelectric output recovers sustainably and the government delivers on electricity generation commitments—including expedited renewable capacity additions and rehabilitated thermal plants—Mozal could theoretically restart. Yet no restart timeline has been announced, and industry analysts assess the probability at below 40% within the next 24 months.

## When Might Mozambique Recover Its Aluminium Export Capacity?

Recovery hinges on three parallel conditions: (1) sustained Cahora Bassa reservoir recovery; (2) political stabilisation and reduced currency volatility; and (3) renewed investor confidence in Mozambique's commitment to infrastructure rehabilitation. Each is necessary but insufficient alone. Until all three align, Mozal remains in strategic limbo—a cautionary tale of how resource dependency without energy security creates systemic fragility.

The aluminium closure exposes Mozambique's reliance on single-sector extraction and underinvestment in power generation. Diversifying the economy and securing energy resilience are prerequisites for re-attracting capital-intensive manufacturing—a lesson Mozambique's policymakers cannot ignore.

---