Shares of South32 Ltd (S32.AU) plunged 5.14% in Monday's trading session following the company's announcement of potential impairment and production uncertainty at its Mozal aluminium smelter in Mozambique.
The diversified miner revealed that it has been unable to secure affordable electricity prices for its Mozal operations beyond March 2026, despite six years of negotiations with the Mozambique government-owned hydroelectric power supplier, Hidroeléctrica de Cahora Bassa (HCB). This impasse has forced South32 to put its FY26 production guidance for Mozal under review, signaling significant uncertainty for one of its key assets.
Adding to the concerns, South32 disclosed that recent drought conditions could impact HCB's ability to generate and deliver sufficient hydro-electric power to the Mozal smelter. The combination of these factors has led the company to flag a potential impairment of the Mozal facility in its upcoming financial statements. Given that Mozal produced 314,000 tonnes of aluminium in the 2024 financial year, any disruption to its operations could have a material impact on South32's overall production and financial performance.
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