South32 pulls Mozambique smelter forecast amid unrest

Australian miner South32 (ASX: S32) has withdrawn production guidance for its aluminum smelter in Mozambique amid widespread and deadly unrest following the country’s disputed presidential election.

The protests erupted in the wake of October’s election, where opposition parties accused Frelimo, Mozambique’s ruling party since independence in 1975, of rigging the results. The unrest has claimed at least 100 lives, predominantly demonstrators killed during clashes with police. Hundreds have been injured, and thousands arrested.

South32, which holds a 63.7% stake in the smelter, said road blockages caused by the protests are disrupting the transport of raw materials to the facility. The company confirmed that its workforce remains safe, and there have been no direct security incidents at the plant.

Shares in South32 closed 2.2% stronger on Tuesday in Sydney at A$3.68 apiece for a market capitalization of A$16.6 billion ($15 billion). They’ve traded in a 52-week range of A$2.75 to $4.02. 

Mozal smelter

The Mozal Aluminium smelter, located about 20 km west of the capital, Maputo, had been forecast to produce 360,000 tons of aluminum in the financial year ending June 2025. However, the unrest has hindered operations, with protests over the weekend resulting in injuries near the capital and the shutdown of two nearby power stations.

South32 noted it has implemented contingency plans to mitigate operational impacts, but did not disclose specifics.

BMO Capital Markets mining analyst Colin Hamilton said the bank expects the work to minimize operational interruptions and would likely be the steady shutdown of some potlines at the facility. 

“Given concerns over the electricity situation in the country following outages at power plants, this would seem prudent to prevent potential potline damage,” Hamilton wrote Tuesday, in a note to investors. “Any outage will add to recent capacity resets in Russia and China, and potentially boost physical premiums,” he said. “However, this could also see greater alumina availability in the global spot market as cargoes look for a new home, which in such an illiquid spot market may well see further price declines.”

Aluminum is Mozambique’s third-largest export earner, with Mozal accounting for US$1.1 billion of exports in 2023, according to the central bank. The smelter contributed about 28% of South32’s total aluminium output in fiscal 2024.

The crisis is spilling across borders. South Africa, a key trading partner, has indefinitely closed its main border crossing with Mozambique—a critical transit point for South African chrome exports headed to Maputo’s port.