Mozambique's Mozal Aluminium claims "Green," but can it withstand the EU carbon tax?

Mozambique's largest industrial player, Mozal, is promoting its aluminium as 'green,' a claim that could help it avoid the looming European Union (EU) carbon border tax. However, doubts have emerged about the legitimacy of these claims, raising concerns about the future of one of the world's weakest economies if the smelter cannot meet EU standards. The potential impact of the EU carbon tax on Mozal's operations is a cause for concern.

The EU's carbon border adjustment mechanism, set to take effect in 2026, will impose taxes on carbon-intensive imports such as aluminium, steel, and cement. The tax prevents heavy industries from relocating to countries with weaker carbon regulations to escape the EU's stringent environmental standards.

Mozal, a major aluminium smelter located outside Mozambique's capital, Maputo, is owned by South32, a company headquartered in Australia and spun off from BHP Billiton in 2015. South32 CEO Graham Kerr once stated that European carmakers are willing to pay a premium for Mozal's aluminium because it is primarily powered by hydropower rather than the fossil fuels many of its competitors use.