This letter was received from one of our readers:
Dear Ed,
In the debates surrounding load shedding I am astonished how little attention is given to South 32's Mozal and Hillside aluminium smelters. These have never experienced load shedding and in terms of their latest contract with Eskom (renewed in 2021) they will pay just 17c/kWh until 2031. Their combined consumption exceeds the full output of Koeberg; Hillside's pot 1 and pot 2 alone consume 900 MW. Of course 17c/kWh is well below production cost so they are heavily subsidized by the rest of South Africa.
Add to that the sweet deal to supply coal for Duvha at R550/t and that some senior NERSA staff involved in signing off these deals were recruited by South32/ BHP Billiton SA, we are clearly being taken to the cleaners by this company. Yet they still had the audacity to report 2022 a "best ever, bumper year" in an Engineering News article just recently. So while the power is off for most of us, South32 are coining it all the way to the bank.
The argument that these smelters "stabilize" the network is just smoke and mirrors in my view. Without these loads we could have saved billions in diesel cost, and the spiraling electricity price could have been avoided to a large extent. The job loss argument is another one - whilst a few thousand jobs may be lost should the smelters close, this pales in comparison to the job losses brought on all over the country by persistent load shedding, not to mention the havoc wrought to our entire economy.
Why is this not central in our energy debate? It is as if they are untouchable, and stealthily forgotten about. Which is difficult to understand given they are by far the country's largest electricity consumer, at about 9% of Eskom's capacity. Even after the state of emergency announcement not even a peep is heard about the smelters, but Karpowership is of course on table, in spite of its exorbitant dollar-based cost and likely unfavorable environmental impact.
It is still not too late. The new CEO of Eskom could get out of these contracts if they really wanted to and close these smelters down, which should have been done years ago given our severe lack of generation capacity. If only someone would see the elephant in the room!
Send your comments to the editor: rogerl@nowmedia.co.za
