JPM-JPM Mining Daily Iron ore 百分之0.3, spodumene 百分之2.2-20250715

Mozal aluminium smelter impairment and guidance review; retain Neutral

Key takeaways: 1) Uncertainty around Mozal Aluminium smelter’s power tariff outlook hasled S32 to flag an impairment (net asset value last reported at $500m), along with an FY26guidance review (currently 370kt vs JPM now at 326kt), 2) we have reduced operatingcapacity over the next 12 months given the likelihood S32 won’t continue to reline pots (andthen needs to ramp up), and we factor in a step change higher in power pricing that reducesour NPV from ~$1.1bn to $130m , and 3) We believe the issue will compound marketnervousness on the Hillside power contract reset in 2031, along with broader investorperceptions of operating performance. Our NPV based PT reduces from $3.30ps to $3ps aftera hit to our Mozal valuation. We retain a Neutral rating and preference for BHP for diversifiedmining exposure, or CSC for leveraged base metal exposure.