South32 and Eskom have stepped up negotiations to establish a new electricity supply agreement for the Hillside Aluminium smelter in Kwa-Zulu Natal following the closure of the group’s Mozal smelter in Mozambique.
Mozal was shut down after years of negotiations between South32, Eskom and the Mozambican government failed to deliver a new electricity supply contract. The smelter was put on care and maintenance effective March 15 affecting an estimated 4,000 direct and indirect jobs which represented one-third of Mozambique’s manufacturing work force.
South32 and Eskom have now established a joint working group to secure a new, long-term electricity supply agreement for the Hillside smelter which is targeted to be introduced in 2031.
According to a joint statement from South32 and Eskom “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 statement added the project is “an important step towards supporting the future of one of Southern Africa’s most important industrial businesses. Hillside supports a total of 3,650 direct and indirect jobs, contributes to an estimated 29,000 jobs across the economy and plays a key role in supplying aluminium to the local downstream industry.”
In February, South32 CEO Graham Kerr said he was more optimistic about renewing a power agreement with Eskom for the Hillside smelter which produces 720,000t of aluminium annually.
Kerr commented “Every single week and year Eskom is making progress on renewables and nuclear coming into their network. We are working closely with them over time to get a more balanced solution. What we do have is time.”
He pointed out Eskom was more flexible on tariffs while about 30% of Hillside’s production was sold within South Africa.
South32 COO Noel Pillay commented, “as Hillside celebrates 30 years of operation this year, we are collaborating with the Government of South Africa and Eskom to secure its future for decades to come. We have made a solid start.”
Eskom CEO Dan Marokane said, “Eskom values the long-standing partnership with South32 and the important role Hillside Aluminium plays 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.”
