Mozambique to End 50-Year Hydropower Deal with South Africa

Mozambique is preparing to cancel a 50-year hydropower supply agreement with South Africa’s state-owned electrical provider, posing concerns to the continent’s most industrialized economy and the survival of Africa’s second-largest aluminum smelter.

Mozambique intends to shift 1,150 megawatts of power from its Cahora Bassa plant to domestic usage, according to its upcoming energy transformation strategy (Bloomberg).

“The main short-term hydro priority is the repatriation of electricity from Hidroelectrica de Cahora Bassa currently exported to South Africa” when the contract expires on December 31, 2030, according to the government’s plan document.

The decision presents a problem to South Africa, which is dealing with power outages impeding economic growth, as well as South32 Ltd., the operator of the Mozal aluminium smelter near Mozambique’s capital, Maputo, which uses electricity purchased from South African utility Eskom Holdings SOC Ltd.

South32 requires approximately 900 megawatts of electricity for Mozal’s aluminium output, which the business advertises as being made using clean energy.

However, due to Mozambique’s lack of a national grid link, Mozal, which produced 345,000 tons last year, is unable to receive direct power supply from Cahora Bassa.

Instead of directly feeding Mozal, the 2,075-megawatt Cahora Bassa plant, Africa’s third-largest hydroelectric facility, sends electricity via 1,400 kilometers (870 miles) of transmission lines to Eskom in South Africa. Eskom then sells power to Mozal.

The sales agreement has been in effect since 1979, when the last of the turbines was built.

“HCB’s electricity is cheap and clean,” the administration stated in its strategy plan. “Important decisions will have to be made regarding HCB’s clean-energy trading end-destination.”

Mozambique intends to promote the use of renewable energy in industrial parks in order to increase the value of its production of so-called green minerals like lithium and graphite.

Eskom claimed it was unaware of the desire not to extend the contract.

If the contract is not renewed, Eskom may have to explore alternate power sources, while South32 will have to find another source of electricity, preferably renewable.

Written by PH

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