PERTH (miningweekly.com) – Diversified miner South32 has finalised an energy supply agreement for its Hillside aluminium smelter, in South Africa.
The miner on Friday said that the National Energy Regulator of South Africa had approved the long-term energy supply agreement between Hillside and national energy provider Eskom, securing the smelter’s energy supply until 2031 under a rand-based tariff with a rate of escalation linked to the South Africa Producer Price Index.
South32 CEO Graham Kerr said that the new agreement further extended the long-term working relationship with Eskom.
“Hillside has been a major Eskom customer for 25 years and this agreement provides power cost certainty for a further ten years, with Eskom receiving a price aligned to long-term tariff policy. Eskom also retains the current flexibility to interrupt supply to the smelter to support management of the national electricity grid and minimise load-shedding.”
Kerr said that the aluminium smelter remained an important contributor to South Africa’s economy, both directly through local employment and through its integration with significant downstream industries that rely on output from Hillside.
“As the world transitions to a low carbon future, we will work with the government, Eskom and other potential partners to explore options to secure a green energy solution for Hillside,” Kerr added.
With the new tariff agreed, the smelter remains competitive on the global cost curve, with operating costs for 2021 expected to reflect the higher power charges from the new agreement incurred since August 2020.