Good afternoon. 0.3 US cents may not sound like a lot of money, but it could well be what causes the Mozal aluminium plant to close. That is the difference between the maximum tariff per kilowatt-hour which Mozal’s majority owner, South32 of Australia, is understood to be willing to pay (6.4 cents), and the minimum the Mozambican government says must be charged (6.7 cents) in order to cover the costs of generating the 950MW or so of electricity Mozal uses. Over the course of a year it amounts to almost $25m dollars, assuming that the plant (which runs 24 hours a day) consumes power steadily all year round. South32 has threatened to shut down the plant if it does not reach a satisfactory agreement on renewing the current power supply contract, which expires in March.
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Technically Mozal buys its power not from the Mozambican government or its electric utility EDM but from a company jointly owned by EDM and South African power utility Eskom. However, because the power from Mozambique’s Cahora Bassa dam which is sent straight to South Africa is critical to supplying Mozal, the negotiations have been left largely to Mozambicans.
