Mozambique: President Daniel Chapo says Mozal’s proposed electricity tariff would lead to HCB collapse – Watch

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Mozambique: President Daniel Chapo says Mozal’s proposed electricity tariff would lead to HCB collapse – Watch

3:30 CAT | 18 Aug 2025

Screen grab: STV

The Mozambican President has said that the energy tariffs proposed by Mozal, Mozambique’s largest industrial company, would lead to the collapse of the Cahora Bassa Hydroelectric Plant (HCB), rejecting the threat of closing the aluminium smelting unit in 2026.

“What we are doing right now is defending the national interest and the interests of the Mozambican people. […] We have an increased responsibility as a government. We cannot accept tariffs that will lead HCB to subsidize Mozal and collapse HCB, which is our golden goose,” Daniel Chapo told reporters on Sunday, after participating in the Southern African Development Community (SADC) Summit in Madagascar.

Mozal, which employs approximately 5,000 people at Africa’s second-largest aluminium smelter on the outskirts of Maputo, announced on August 14 that it would cut investment and lay off contractors, maintaining operations only until March 2026, when the electricity supply contract expires, claiming it has no guarantees of continuity.

In a market announcement reported by Lusa, the Australian group South32, which leads the unit, said it has been in talks with the Mozambican government, HCB, and South Africa’s Eskom – which buys electricity from HCB and sells it to Mozal – “on securing sufficient and affordable electricity supply to enable Mozal to operate beyond March 2026” to “allow operations beyond March 2026”, when the current energy supply contract expires.

“Neither the Republic of Mozambique nor the government, nor HCB as a company, have a contract with Mozal. This is the first point. The Republic of Mozambique, through HCB, has a contract with Eskom, which is South African. […] If this matter were to be discussed, in principle, it should be with Eskom, at the South African level,” the Mozambican President said.

“We are currently discussing this aspect and in this debate on tariffs, and I am absolutely certain that a consensus will be reached one day,” Chapo added.

For South32, the “engagements” made so far “do not provide confidence that Mozal will secure sufficient and affordable electricity beyond March 2026”.

“As a result, we will limit investment in Mozal, stopping pot relining and standing down associated contractors starting this month”, reads the announcement by South32, which anticipates that the plant will be placed on “care and maintenance” at the end of the current contract.

Mozal purchases almost half of the energy produced in Mozambique and is estimated to account for around 3% of the gross domestic product (GDP).

The Mozambican government affirmed on July 15 that Mozal’s energy supply was not in question, and that it intended it to be guaranteed by the state-owned Electricidade de Moçambique (EDM).

“It is in our interest that Mozal continues to have sufficient energy. […] It is also in the government’s interest that the energy provider, the energy supplier, be EDM,” said Council of Ministers spokesperson Inocêncio Impissa.

“Currently, contracting is done directly, and the aim is to introduce the ‘player,’ which is EDM, the entity responsible for marketing the energy produced by our hydroelectric plant [HCB]. And there are elements here that must be closed for this purpose,” Impissa added, at the time.

Electricity is supplied to Mozal through the South African company Eskom, which in turn purchases energy from HCB hydroelectric power plant in central Mozambique – 66% of total production in 2024. However, the Mozambican government is determined to reverse this situation.

Lusa reported in February 2024 that the Mozambican government intended to repatriate, for domestic use, the electricity it had exported from HCB to South Africa since 1979, as set out in the Strategy for Energy Transition in Mozambique by 2050.

The document sets as a goal for 2030 “the repatriation of HCB electricity currently exported to South Africa (8-10 TWh [TeraWatt-hours]), as well as the addition of 2 GW [GigaWatt] of new national hydropower capacity by 2031.”