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

Simply Wall St.12-23 16:14

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, ...

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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. Rare earth metals are an input to most high-tech devices, military and defence systems and electric vehicles. The global race is on to secure supply of these critical minerals. Beat the pack to uncover the 35 best rare earth metal stocks of the very few that mine this essential strategic resource.South32 Investment Narrative RecapTo 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 PerspectivesASX:S32 1-Year Stock Price Chart 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 NarrativeDisagree 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.Curious About Other Options?Every day counts. These free picks are already gaining attention. See them before the crowd does:AI is about to change healthcare. These 29 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early.These 13 companies survived and thrived after COVID and have the right ingredients to survive Trump's tariffs. Discover why before your portfolio feels the trade war pinch.Uncover the next big thing with financially sound penny stocks that balance risk and reward.  This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    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\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.Mobile Infrastructure for Defense and DisasterThe next wave in robotics isn't humanoid. Its fully autonomous towers delivering 5G, ISR, and radar in under 30 minutes, anywhere.Get the investor briefing before the next round of contractsSponsored On Behalf of CiTechNew: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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