South32 Limited announced that it is actively working to secure a new electricity supply agreement for its Mozal Aluminium smelter in Mozambique, a development critical to maintaining operations beyond the current contract’s March 2026 expiration. Over the past six years, the company has engaged with the Government of the Republic of Mozambique, Hidroeléctrica de Cahora Bassa (HCB) and Eskom. Historically, Mozal has relied on hydro-electric power from HCB, with Eskom providing supplementary electricity when needed. However, recent challenges, including drought-induced capacity constraints at HCB and difficulties in agreeing upon an affordable price tariff, have cast uncertainty over the future electricity supply. In response to these uncertainties, South32 is assessing the carrying value of Mozal Aluminium and expects to recognize an impairment expense in its FY25 results—a figure that will be disclosed once the assessment is finalized. The announcement also indicated that production guidance for FY26 is under review due to the unclear operational outlook beyond March 2026. Mozal Aluminium, a key asset for South32, contributes significantly to Mozambique’s economy by accounting for roughly three percent of the nation’s gross domestic product and supporting thousands of jobs. Investors can view the news from two perspectives. On the bullish side, South32’s proactive negotiations and ongoing efforts to secure a stable and affordable power supply underscore its commitment to long-term operational stability. The company’s strategic engagement with major stakeholders could resolve the electricity challenges and secure Mozal’s critical role in the region’s economy. Conversely, bearish sentiment arises from the immediate risks posed by the possible insufficient power supply—exacerbated by drought conditions—and the imminent impairment expense, both of which might impact short-term financial results and production forecasts.