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Pathways being laid to secure lower carbon electricity supply for Hillside Aluminium

South32 CEO Graham Kerr.

South32 CEO Graham Kerr.

24th August 2023

By: Martin Creamer

Creamer Media Editor

     

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JOHANNESBURG (miningweekly.com) – During the 12 months to June 30, diversified mining company South32 has progressed initiatives to support its target of halving operational greenhouse gas emissions by 2035.

At Worsley Alumina in Australia, which supplies South Africa’s Hillside Aluminium smelter in KwaZulu-Natal, conversion of the first onsite boiler from coal to natural gas has commenced and conversion of the second boiler will begin this financial year (FY24).

At Sierra Gorda copper mine in Chile, the company has transitioned to an agreement for cost-efficient 100% renewable electricity supply.

In South Africa, the Sydney-, Johannesburg- and London-listed company, headed by CEO Graham Kerr, is continuing to work with Eskom and other stakeholders in this country’s energy sector on pathways to secure lower carbon electricity supply for the Hillside smelter, which produced a record 719 000 t of product in the 12 months to June 30.

The company has also signed a non-binding memorandum of understanding with Eskom to explore the potential to purchase nuclear energy attributes in the near term as it continues to investigate and undertake market testing for renewable power supply at Hillside in the longer term.

Also achieving a yearly production record were South Africa Manganese and Australia Manganese, with aluminium production increasing by 14% and manganese production increasing by 4%.

The company expects to increase low-carbon aluminium production by 12% in FY24 as Brazil Aluminium and Mozal Aluminium in Mozambique ramp up.

On how much time South32 is giving itself to transition away from carbon-intensive energy at Hillside, Kerr said in response to Mining Weekly that the current contract in place with Eskom runs to 2031.

Although South32 thus has time on its side in its climate change commitment, it is also acutely aware of Europe’s particular preference for green aluminium and its need to ensure that Hillside has the option to sell into green preference jurisdictions.

Growing demand for cleaner, greener inputs in Europe is spurring South32 to accelerate decarbonisation plans at Hillside.

"In particular, the European automakers' preference for green aluminum is coming quite strong and quite quickly. That is something that worries me that we need to make sure we prepare Hillside to continue to have the option to sell in Europe and other places like the Americas,” said Kerr.

This is important not only for South32 but also for Hulamin, which remelts primary aluminum from Hillside to manufacture products for export from South Africa into the global market.

While preliminary work shows that it is technically feasible to power the aluminum smelter with renewables, the market in South Africa needs more time to develop renewables to ensure life at Hillside beyond 2031.

“So, we’re doing a lot of work in this space,” Kerr emphasised to Mining Weekly. Hillside plays an important role in keeping South Africa’s national electricity grid stable and helping to manage loadshedding given its consistent level of electricity consumption and the interruptibility provision in its energy supply agreement. During times of high strain on the national grid, Eskom interrupts around 450 MW of supply to Hillside’s potlines to support the grid, which means less loadshedding for other customers.

Taking into account Hillsides’ linkages to numerous other sectors, the smelter’s economy-wide contribution amounts to an estimated R25.8-billion, or 0.4%, of South Africa’s gross domestic product (GDP). Hillside’s economy-wide contribution to KwaZulu-Natal’s GDP amounts to R10.1-billion, or about 1.3%.

Moreover, Hillside is one of the largest industrial employers in Richards Bay, directly employing close to 3 400 people in the 2022 financial year.

MANGANESE LOGISTICS

On whether the company’s talks with Transnet on improving manganese logistics were enhancing confidence that efficient logistics would be restored, South32 COO Noel Pillay said the company was collaborating to arrive at concrete solutions. “My teams are hopeful that we can recraft some of the lost navigation,” Pillay added.

Secure access to rail and port infrastructure is critical to South32 being provided with confidence for future investment decisions at the Wessels manganese mine in South Africa’s Northern Cape. 

Meanwhile, reliable supply of electricity at an affordable price is what will be required to take the company’s Manganese Alloys plant in Meyerton, Gauteng, out of care and maintenance.

LOW-CARBON COMMODITIES

The Hermosa project in Arizona, in the US, is presenting an opportunity to produce low-carbon commodities for several decades, with a final investment decision at Taylor’s zinc/lead/silver deposit planed towards the end of this calendar year.

Separately, the opportunity to produce battery-grade manganese from Hermosa’s Clark deposit has been confined through the signing of multiple non-binding, non-exclusive memoranda of understanding for future potential supply into North American markets.

A record $1.2-billion was returned to shareholders during the year, which is equivalent to 11% of South32’s market capitalisation, with $0.032 a share being declared in the June 2023 half-year.

Edited by Creamer Media Reporter

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