What's Happening?
The Mozal aluminium smelter in Mozambique is set to shut down in mid-March due to failed power deal negotiations, impacting global aluminium supplies. The smelter, with a capacity of 560,000 metric tons
per year, is a major supplier to the European Union, having shipped nearly 430,000 tons in the first ten months of 2025. The shutdown is expected to create a deficit of around 600,000 tons in the global aluminium market. Europe is likely to compensate for this shortfall by increasing imports from Canada and the Middle East. The situation is compounded by an outage at Century Aluminum's smelter in Iceland and the EU's new carbon tax on aluminium imports.
Why It's Important?
The Mozal shutdown highlights the fragility of global supply chains and the impact of geopolitical and economic factors on resource availability. Europe's reliance on Mozal underscores the need for diversified supply sources, especially in light of the EU's carbon tax, which could further strain supply and increase costs. The aluminium market is crucial for industries such as automotive and construction, and disruptions could lead to increased prices and supply shortages. The situation also emphasizes the importance of stable energy agreements for industrial operations.
What's Next?
European aluminium consumers will need to secure alternative sources to mitigate the impact of the Mozal shutdown. This may involve negotiating new supply agreements with Canadian and Middle Eastern producers. The EU's carbon tax will also require companies to adapt their supply chains to minimize costs. The situation may prompt further discussions on energy security and the need for sustainable and reliable power sources for industrial operations.
