By Johnathan Paoli
South Africa and Mozambique could face a significant economic shock if operations at the Mozal aluminium smelter in Maputo are halted, with thousands of jobs and cross-border economic stability hanging in the balance.
This is according to the Congress of South African Trade Unions (Cosatu), which has warned that the potential shutdown would have far-reaching consequences for both countries.
Cosatu estimates that around 5 200 direct jobs in Mozambique and approximately 22 000 indirect jobs in South Africa linked to Mozal’s extensive value chain could be at risk should the smelter cease operations.
Mozal is one of the largest industrial employers in Mozambique and a critical anchor of regional manufacturing and logistics networks that stretch deep into South Africa’s economy.
Cosatu Parliamentary Co-ordinator Matthew Parks said the possible closure comes at an especially precarious moment for both countries.
South Africa is currently battling an unemployment rate of about 42%, while Mozambique continues to struggle with widespread poverty and high levels of joblessness.
“If Mozal shuts down, it will not only impact the people directly employed at the smelter. It will ripple across supply chains, contractors and communities. There is also a real risk that it could increase cross-border migration, as displaced Mozambican workers seek employment opportunities in South Africa, which is already under severe economic strain,” Parks said.
Mozal, which is largely South African-owned, is heavily dependent on electricity supplied from Mozambique’s Cahora Bassa hydroelectric dam and has historically benefited from favourable electricity tariffs from Eskom.
However, the company has faced mounting operational challenges, including drought-induced electricity shortages that have reduced generation capacity at Cahora Bassa.
Compounding the problem is the impending end of Eskom’s subsidised electricity tariff regime for Mozal, which is set to expire in March.
Electricity costs represent the single largest component of the smelter’s operating expenses, making the plant particularly vulnerable to sharp increases in power prices.
Parks said Cosatu is engaged in ongoing discussions with both the South African and Mozambican governments, Eskom and the Presidency in an effort to find an interim solution that would allow the smelter to continue operating beyond March.
He stressed that urgent intervention is needed to prevent a shutdown while longer-term options are explored.
“We need creative and practical solutions that could include short-term tariff adjustments or other mechanisms that can give Mozal breathing room. The alternative is the loss of thousands of jobs and severe economic disruption in both countries,” he said.
He also placed Mozal’s challenges within the broader context of South Africa’s electricity crisis.
Parks noted that municipal debt to Eskom has ballooned to around R100 billion, placing immense financial strain on the power utility and limiting its ability to offer relief without jeopardising its own sustainability.
Cosatu called on both governments to strike a careful balance that supports strategic industrial operations such as Mozal while ensuring Eskom’s long-term financial health.
According to Parks, saving Mozal is not only about one smelter, but about safeguarding industrial capacity in the region.
“March is the immediate crisis point, but we cannot rely on stop-gap measures forever. We need long-term strategies to stabilise energy supply, support industrial production, re-industrialise our economies and create jobs on a sustainable basis,” he said.
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