Pressure on Eskom as South32’s Mozal edges towards closure

PRESSURE on Eskom, South Africa’s main electricity supplier, to come up with more affordable power tariffs for more of its industrial customers has intensified after South32 said on Tuesday it will be putting its Mozal aluminium smelter in Mozambique on care and maintenance from March. The reason is that no agreement can be reached on a contract to supply it with reliable and affordable power.South32’s announcement occurs hard on the heels of a statement by the Glencore-Merafe Chrome Venture in SA that it would put two of its idled smelters, Boshoek and Wonderkop, on care and maintenance, with an impact on 2,425 jobs directly and 17,000 jobs indirectly, due to unaffordable power. Earlier this month Eskom agreed to discuss a new electricity tariff to enable the smelters to continue operating on a limited basis.Several years ago, Mozal was one of South32’s jewels because it was able to produce “green”, low-cost aluminium, supplied by electricity from the Cahora Bassa hydroelectric power plant. However, due to the regional drought, the dam is only producing at about one-fifth of its former capacity. Most of Mozal’s power – about 940 MW, consumed 24/7 – is now being supplied by Eskom, South32 CE Graham Kerr said on a conference call today. Eskom is the only real source of baseload power in Southern Africa but it has two disadvantages: it is still reliant on coal-fired power stations and it is expensive. According to the Minerals Council South Africa, Eskom tariffs have increased by 900% since 2008.Kerr said discussions with the Mozambican government, Cahora Bassa Hydroelectricity (HCB) and Eskom on a supply contract that would enable Mozal to remain internationally competitive began about six years ago. The current contract ends in March. The aim was to be able to draw on Eskom for affordable power for a couple of years until Cahora Bassa is able to get back to full capacity.He said Mozal employs about 5,000 people directly in Mozambique, accounts for 3% of the country’s GDP, and if contractors are included, it has an indirect impact on about 22,000 people. It spent about $425m with Mozambican companies in 2024, and also uses South African suppliers. Eskom earns about R5.5bn of its revenue from supplying Mozal. Kerr added that it would be difficult for Eskom to find another offtaker for 940MW of power, which could jeopardise the future of some of its coal-fired power stations.South32 already has a stable supply agreement with Eskom on 1,140MW for the Hillside smelter in KwaZulu-Natal. The agreement expires in 2031, and there are discussions under way to supply Hillside in the longer term with a blend of renewables/battery, coal and nuclear power. Hillside has no spare capacity to process the alumina currently being shipped to Mozal. It will probably sold on the open market to the Middle East, Kerr said.The post Pressure on Eskom as South32’s Mozal edges towards closure appeared first on Miningmx.Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com