Mozal, the aluminum smelter located in Maputo province, has announced collective layoffs as part of a “care and maintenance” operational suspension set to begin on March 15, after Australian company South32 failed to secure a new electricity supply agreement at competitive prices.
According to a document sent to Mozal’s union committee, the company proposes compensation of 6% of annual salary per year of service for employees earning above seven sector minimum wages, and 40 days’ salary per year of service for the remaining workers. Additional benefits include a professional retraining allowance, six months of health insurance after contract termination, and a proportional performance bonus for the 2026 financial year.
Mozal will also cover tuition fees for employees with active scholarships for the 2026 academic year and provide special payments for pregnant workers and those on maternity leave. The company confirmed it will waive infrastructure costs related to the Vila Esperança Housing Project, although employees will remain responsible for any associated bank loans.
South32 confirmed that operations will be suspended due to the inability to guarantee sufficient and affordable electricity, citing the impact of drought on Mozambique’s hydropower generation and the failure to reach a reasonably priced agreement with backup supplier Eskom. Maintenance costs, including contract terminations, are estimated at around $60 million, with ongoing annual costs of about $5 million.
The Mozambican government says it is making every effort to prevent the smelter’s closure. Mineral Resources and Energy Minister Estêvão Pale stated that authorities are working to ensure Mozal continues operating, though details of negotiations remain undisclosed.
South32 employs over 2,000 people directly in Mozambique, with another 2,000 contractors, and the smelter accounts for roughly one-third of the country’s manufacturing jobs, underscoring the potential economic impact of the suspension.
Source: Diário Económico
