[miningmx] — BHP Billiton is not prepared to continue paying the environmental levy
for the power its Southern African aluminium smelters consume.
In the past, BHP Billiton has paid the levy. But if it stops now, it would imply other
electricity consumers have to pay a higher levy to compensate for the loss of income
because of Billiton’s refusal, Eskom said in its application to the National Energy
Regulator (Nersa) for a review of the aluminium contracts.
Aluminium smelters release gases that contain mercury, lead, silica and cadmium.
Cadmium is one of the most toxic industrial waste metal materials.
The environmental levy of 3.5 cents per kilowatt hour (kWh) that Billiton pays for the
electricity used by its smelters amounted to R63.9m in the 2012 financial year, but
this year the figure would be about R795.8m, and next year R839.1m. All other
consumers have to pay the levy.
Since 2001, Eskom has recorded losses of R10.7bn on the contracts with the Hillside
smelter.
Nersa on Monday made a copy of Eskom’s review application available to
Sake24.
The application, together with Eskom’s own figures on the financial implications of the
contracts, is being published on Nersa’s website on Tuesday as part of an invitation
to the public to participate in the contract review process.
The smelters consume about 9% of Eskom’s electricity, but, according to
Sake24’s calculations, provide only 2% of Eskom’s income.
After the disclosure of the contract formula, Billiton said the contracts have always
covered the cost of providing the electricity, but Eskom said this was not the case.
“The electricity grid is under pressure, and the cost of electricity production is rising.
To avoid another financing crisis, it is necessary to switch to tariffs that reflect the
cost,’ Eskom said in the application.
Eskom CEO, Brian Dames, said in an interview with Sake24 on Monday the
parastatal wanted tariffs for the smelters to be consistent with the tariffs that other
consumers pay.
Last year BHP Billiton paid an average tariff of 17.75 cents per kWh at Hillside. At the
time, Megaflex, Eskom’s standard industry tariff, was 47.85 cents per kWh.
The loss of R10.7bn since 2001 is the difference between Megaflex and Hillside’s
tariffs.
“Nersa is being asked to consider the tariff in terms of the contracts and to determine
whether, under the present circumstances, it is still objectively justifiable and fair,
especially in light of rising prices for electricity that the public is bearing,’ says
Eskom’s application to Nersa .
CAN’T IGNORE CONCERNS
The Public Prosecutor previously wanted to issue a summons to gain access to BHP
Billiton’s aluminium contracts with Eskom. This is one of the reasons why it was
essential for Nersa to review these contracts.
Another reason was the finding by Judge NF Kgomo in Sake24’s court
application against Eskom and BHP Billiton that the price information must be
disclosed.
“It is clear that aluminium smelters do not pay (electricity tariffs) that other
consumers, including other industrial consumers, pay.
“This makes the terms of the contracts highly relevant with respect to the stability of
electricity supply to the public. The disclosure is in the public interest,’ Kgomo found.
Eskom quoted this finding in its application to Nersa for the review of the contracts.
“Eskom and Nersa cannot ignore these concerns,’ Eskom said in its application.
– Sake24
