South Africa (SA) and Mozambique could face a major economic shock if Mozal’s operations in Maputo are halted, the Congress of SA Trade Unions (COSATU) has warned.

The union said that around 5 200 direct jobs in Mozambique and approximately 22 000 indirect jobs in SA linked to the aluminium smelter’s value chain could be at risk.

Matthew Parks, COSATU’s Parliamentary Co-ordinator, told Rise and Shine that the potential closure comes at a precarious time, with SA facing a 42% unemployment rate and Mozambique grappling with high levels of poverty and joblessness. “If Mozal shuts down, it will not only impact the people directly employed but could also increase cross-border migration as displaced Mozambican workers seek opportunities in SA,” Parks said.

Mozal, largely South African-owned, relies heavily on electricity from the Cahora Bassa dam in Mozambique and benefits from favourable tariffs from Eskom. However, the company has faced operational challenges due to drought-induced electricity shortages and the impending end of Eskom’s subsidised tariff regime in March. Parks said discussions with both governments, Eskom, and the presidency are ongoing to find an interim solution that could allow the plant to continue operating.

Electricity costs represent the largest component of Mozal’s operating expenses, and Parks stressed the importance of creative solutions, including short-term tariff adjustments, to preserve the smelter and protect thousands of jobs. He also highlighted the broader context of SA’s electricity crisis, noting that municipal debt to Eskom has ballooned to R100 billion ($5.8 billion), creating financial strain for the utility.

COSATU urged both governments to find a compromise that supports industrial operations while ensuring Eskom’s financial sustainability. Parks added that while immediate solutions are needed for March, long-term strategies are essential to maintain industrial capacity, re-industrialise the economy, and stimulate job creation.

–ChannelAfrica–