South Africa's power utility Eskom and South32 are working on a renewable electricity plan for the Australian firm's Hillside aluminium smelter, to take effect from 2031, the two companies said on Tuesday.
The 720,000 metric tons per year Hillside plant, located on South Africa's east coast, is the biggest aluminium smelter in the southern hemisphere and has a 10-year deal with Eskom for discounted power costs ending in 2031.
South Africa grants power‑intensive smelters discounted electricity tariffs because the plants, which support tens of thousands of jobs, would likely close if forced to pay standard rates in a country with high, coal‑based generation costs.
High electricity costs, which have risen roughly tenfold since 2008, have forced dozens of plants to shut.
Eskom and South32 have set up a joint team to "explore mechanisms that can bring competitively priced renewable energy into the national grid", the two companies said in a joint statement.
"It is important we continue this momentum, working towards a viable, low-carbon energy solution for Hillside from 2031, when the current electricity contract expires," South32 Chief Operating Officer Noel Pillay said.
South32 placed its Mozal aluminium smelter in Mozambique on care and maintenance on March 15, after failing to secure sufficient and affordable power supply for the plant.
Eskom Chief Executive Dan Marokane said the collaboration with South32 would help "develop a long-term energy solution that supports industrial competitiveness while advancing South Africa's transition to a lower carbon electricity system".
