Is South32 headed for meltdown?
As Eskom struggles to deliver power to SA, questions surround the viability of South32’s Hillside aluminium smelter, given its huge power needs and a preferential tariff agreement that is up for renegotiation
It’s hard to imagine a time when electricity in SA was so plentiful that consumers enjoyed the cheapest power in the world and surplus power stations were closed down. This was the case in the 1990s — but it is a distant memory now as Eskom struggles to keep the lights on. The Hillside aluminium smelter in Richards Bay is the last remaining exhibit from this bygone era. Thanks to a highly favourable power supply agreement with Eskom, the smelter was once an excellent asset for its investors. But today it is fighting for its life. The operations are burning cash and are the subject of a large and complex restructuring. Meanwhile, its power contract is up for renegotiation — and a good deal must be struck if the smelter is to survive. South32, owner of Hillside, argues that closing it would have a negative effect on the downstream aluminium sector, cost about 29,000 jobs and hurt the Richards Bay and wider KwaZulu-Natal economies. However, its critics say Hillside has benefited for to...
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