The Industrial Gas Users Association of Southern Africa (IGUA-SA) has warned that if ongoing political unrest in Mozambique continues, this could disrupt regional gas supply and potentially lead to the permanent closure of operations for key industry members in South Africa and Mozambique.
Mozambique has endured civil unrest since the results of the October 9 elections with instability raising significant concerns among industrial gas users in both countries.
During the height of Mozambique’s civil unrest in late December, several association members expressed deep concerns about the impact of potential supply interruptions, emphasising the importance of uninterrupted gas flow for industries in both countries, says Jaco Human, Executive Officer of IGUA-SA.
Industries such as paper and pulp, steel, glass, aluminium, ceramics and the fast-moving consumer goods sector are particularly vulnerable, given their reliance on gas-to-power essential manufacturing processes. “For over two decades, these industries have engineered their production systems and processes and supply chains around reliable gas supply. Switching to alternative energy solutions is simply not feasible as their manufacturing infrastructure is fundamentally built around gas use,” Human says.
The unrest in Mozambique has compounded existing challenges for Sasol, which continues to face reduced natural gas production at its Central Processing Facility (CPF) in Temane, Mozambique. Alex Anderson, Senior Manager of Group Media Relations and External Communication, told Energize the production decline is a direct result of the prevailing instability.
Sasol has informed various gas customers and users of the situation as the company maintains the stability of the gas value chain infrastructure and pipeline network, he says. “The situation around the CPF is under control with no breaches to security or perimeter. Our priority remains the safety of our people, service providers and assets.” Sasol is actively engaging with government stakeholders in South Africa and Mozambique while closely monitoring developments on the ground, he says.
An industry insider, who preferred to remain anonymous, told Energize several international companies in Mozambique had considered declaring force majeure in December when unrest in the region escalated. Australian company Syrah Resources declared force majeure at its Balama graphite operation in Mozambique on December 12 following months of protest action at this site. The unrest led to Syrah Resources defaulting on loans with the US International Development Finance Corporation and the US Department of Energy. Notably, Tesla signed a deal with Syrah Resources in 2022 to purchase about 80% of the graphite it produces at Balama to use in the production of its electric vehicle batteries.
