How Investors May Respond To South32 (ASX:S32) Shuttering Mozal Amid Power Impasse And Alumina Pivot

• South32 Limited has announced that, after unsuccessful efforts to secure a new electricity supply agreement, its Mozal Aluminium operation will be placed on care and maintenance around 15 March 2026, incurring about US$60 million in one-off costs and ongoing annual costs of roughly US$5 million.
• A key implication is that alumina previously supplied from Worsley to Mozal will now be redirected to third-party customers under index-linked contracts, subtly reshaping South32’s alumina earnings mix.
• We’ll now examine how placing Mozal on care and maintenance, and the related power-supply impasse, may influence South32’s investment narrative.

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South32 Investment Narrative Recap

To own South32, you generally need to be comfortable with a diversified mining group where cash flow is closely tied to alumina, aluminium and base metals, and where capital allocation and project execution matter as much as commodity cycles. The Mozal care and maintenance decision crystallises an existing risk around power supply and asset utilisation, but the expected US$60 million one off and US$5 million per year ongoing costs do not appear to change the company’s near term earnings catalysts in a material way.

Among recent announcements, the July 2025 update on Mozal’s impairment is most relevant here, as it effectively pre dated this latest step. By reducing Mozal’s carrying value to US$68 million and recognising a US$372 million post tax impairment, South32 had already reset expectations for that asset, which may limit further balance sheet surprises even as power contract risks at Mozal and Hillside remain central to the short term story.

Yet, for investors, the real issue to understand is how exposed South32 still is to future power contract negotiations and potential production curtailments across its aluminium portfolio...

Read the full narrative on South32 (it's free!)

South32's narrative projects $6.8 billion revenue and $1.1 billion earnings by 2028. This requires 4.5% yearly revenue growth and an earnings increase of about $0.8 billion from $318.0 million.

Uncover how South32's forecasts yield a A$3.48 fair value, in line with its current price.

Exploring Other Perspectives

Seven Simply Wall St Community fair value estimates for South32 span from A$3.37 to A$14.12, showing how far apart individual assessments can be. You can weigh those views against the concentration of risk around long term power contracts for key aluminium assets, which could have a meaningful impact on future operational stability and earnings resilience.

Explore 7 other fair value estimates on South32 - why the stock might be worth just A$3.37!

Build Your Own South32 Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your South32 research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.
• Our free South32 research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate South32's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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