The Hillside aluminium smelter in Richards Bay. The smelter owner South32 and Eskom have begun talks on exploring a new electricity solution for the smelter that includes renewable energy, to be implemented after 2031.,
Image: Supplied
South32 and Eskom have begun working on an new electricity solution for the Hillside Aluminium Smelter in Richards Bay, KwaZulu-Natal, which will include renewable energy, before the current electricity tariff contract between them ends in 2031.
These talks come barely a month after South32 announced the mothballing its other aluminium smelter in Southern Africa, Mozal Aluminium in Mozambique, due to high electricity costs, after talks lasting six years between the global mining and metals group, Eskom and Mozazmbican authorities for an affordable electricity solution failed to reach agreement. Aluminium smelters require an enormous supply of power, typically hundreds of megawatts, 24 hours a day.
The extent of the current agreement between Eskom and Hillside has never been disclosed, but Eskom has lately signaled it will help industries under threat from high power costs, such as the agreement reached this month to grant a 62 cents per kWh tariff for the Samancor and Glencore-Merafe ferrochrome smelters - consumers pay between R1.82 and R2.05 per kWh. Eskom was able to offer these concessions after a successful turnaround strategy over the past three years.
Eskom and South32 said Tuesday in a statement they wish to develop and deliver a long-term energy solution that supports “Hillside’s competitiveness, contributes to regional economic stability and industrial growth, and aligns with South Africa’s broader decarbonisation objectives.”
They have established a working group to explore mechanisms “that can bring competitively priced renewable energy into the national grid,” backed up by “affordable firming capacity,” within the existing regulatory framework.
“While this work will help support the long-term energy needs of Hillside, the solutions being assessed have the potential to benefit Eskom and its broader customer base,” the organizations said.
They said Hillside is one of Southern Africa’s most important industrial businesses. Hillside supports 3,650 direct and indirect jobs, contributes to about 29,000 jobs across the economy, and plays a key role in supplying aluminium to the local downstream industry.
South32 chief operating officer, Noel Pillay, said: “As Hillside celebrates 30 years of operation this year, we are collaborating with the South African government and Eskom to secure its future for decades to come.”
“We have made a solid start. It is important we continue this momentum, working towards a viable, low-carbon energy solution for Hillside from 2031, when the current electricity contract expires,” said Pillay.
Eskom Group chief executive, Dan Marokane, said they valued the longstanding partnership with South32 and the important role Hillside Aluminium played in South Africa’s industrial economy.
“Through this joint process, we are working to develop a long-term energy solution that supports industrial competitiveness while advancing South Africa’s transition to a lower-carbon electricity system,” he said.
“By exploring innovative mechanisms to integrate renewable energy into the grid with appropriate firming solutions, this collaboration has the potential not only to secure the future of Hillside but also to contribute to strengthening the resilience and sustainability of the national electricity system for the benefit of all South Africans,” he said.
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