Implications of EU’s carbon border adjustment mechanism for Mozal
This analysis assesses how the EU Carbon Border Adjustment Mechanism (CBAM) will affect Mozal’s competitiveness in global aluminium markets amid rising electricity costs. It finds that Mozal is likely to remain cost-competitive due to its lower carbon intensity compared with other producers worldwide.
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Wolfram-Pereboom-Policy-Brief-October-2025.pdf
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- The projected impacts of the EU CBAM on Mozal’s global competitiveness offer relevant insights for the ongoing negotiations between Mozal and the Government of Mozambique linked to the HCB- Eskom Energy Contract.
- This analysis examines whether Mozal can remain competitive in global aluminium markets under higher electricity costs. It evaluates the implications of Hidroeléctrica de Cahora Bassa’s (HCB) proposed USD 60/MWh price and Mozal’s counteroffer of USD 50/MWh.
- The results indicate Mozal will remain cost-competitive relative to other aluminium producers worldwide under the European Union’s Carbon Border Adjustment Mechanism (CBAM), which begins to come into effect at the beginning of 2026. Its advantage comes from Mozal’s lower carbon intensity compared with competitor firms.
- Data on production costs, production, and emissions for primary aluminium is from the Wood Mackenzie Smelter Report and includes 153 smelters producing in 2023.
- Data on secondary production is from the World Bureau of Metal Statistics. Carbon prices are sourced from individual country regulatory documents and the World Bank Carbon Pricing Dashboard.