[miningmx.com] — HILLSIDE, BHP Billiton’s Richards Bay aluminium smelter which buys electricity from Eskom at undisclosed tariffs, is the cheapest aluminium producer on a list of 159 such smelters across the globe.
The list was compiled by Deutsche Bank analysts and last week submitted as documentary evidence in the Media24 application against Eskom and BHP BILLITON PLC for a court order obliging the respondents to disclose the pricing formula at which the power utility supplies electricity to Hillside and Mozal, two of Billiton’s smelters in southern Africa.
In terms of the Promotion of Access to Information Act, Media24 argues in the application that Eskom is delivering electricity to the smelters at a loss while the cost of electricity for all others is rising dramatically.
The largest part of the R9.5bn loss that Eskom suffered in its 2009 financial year derived from these contracts, Media24 claims.
Mozal, Billiton’s smelter outside Maputo, is fourth on Deutsche Bank’s list of 159 smelters with the lowest production cost.
According to Deutsche, Hillside is paying US 257 cents for electricity for every ton of aluminium produced by the plant.
At Mozal electricity apparently costs US 251 cents per ton. On May 30 this year Eskom and Billiton, however, agreed on a new pricing formula for Mozal.
A new formula for Hillside is also being negotiated, but this has dragged on for many months.
The two plants respectively produce 700,000 tons and 550,000 tons of aluminium a year.
Earlier in the proceedings, Billiton argued that the prices at which electricity was being supplied to aluminium smelters was highly confidential and that the continued existence of a smelter would be threatened if the prices were disclosed and competitors got hold of the information.
But the Deutsche report, which was complied in May, lists electricity costs for each of the 159 smelters.
In its rebuttal handed in to the South Gauteng High Court in Johannesburg last week, Media24 pointed out that various companies supplied precisely this sort of information for a fee.
Brook Hunt, just such a company in London, charges about R200,000 for a report with plant-to-plant information on cost inputs – from energy to raw materials and labour.
Media24’s deposition says it is ironic that while media organisations and the public cannot afford to obtain this sort of information from Brook Hunt, other producers and clients about whom Billiton is apparently concerned decidedly can.
On April 20 Pieter van Dalen from the DA submitted a confidential quarterly report from Eskom which showed that the two smelters paid up to only 12c per kW/h for electricity. At the time the rest of Eskom’s customers were charged an average of 31c and Johannesburg was paying 50c.
