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South32 Ltd (ASX:S32) has warned shareholders there’ll be an “impairment expense” in the company’s FY25 results as work to lock down a vital electricity supply extension for the Mozal aluminium smelter rolls on.
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The Mozal smelter has had electricity supplied by the Hidroeléctrica de Cahora Bassa hydro-electric power generator since 2020, but that deal runs out next year.
The company has been talking deal extensions since they first signed on the dotted line at the start of the decade, but in mid-2025, talks have still barely progressed, with South32 “unable to agree an affordable price tariff.”
Drought conditions in Mozambique have impacted the electricity situation, too; the HCB has been struggling to meet expectations under the current deal.
“We are assessing the carry value of Mozal given the increased uncertainty regarding future electricity supply,” the company wrote today, “and expect to recognise an impairment expense in our FY25 results.
“We are continuing to engage the Government of the Republic of Mozambique, HCB, and Eskom [who have managed HCB since the 1920s] on securing affordable electricity supply to enable Mozal to operate beyond March 2026 and maintain its substantial contribution to the economy of Mozambique.”
South32 has also flagged FY26’s production guidance for Mozal as “under review.”
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All this has left holders skittish – especially considering the Oz miner is talking about whether Mozal will keep operating – and the company’s value dropped a quick -3.7% as soon as the bourse opened in Week 28.
S32 stocks are now at $2.99 early in Monday’s morning trade.
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