[DEBATE] : (Fwd) Aluminium smelters keep on tickin'?

[Patrick Bond]

(Anyone on the debate list from Richards Bay? I can't find any info on 
whether BHP Billiton has been load-shed. They are 'mum'...)

Money Web
Economic trends

 Besieged Eskom to speak next week
Silence in response to outrage.

David Carte
18 Jan 2008 16:49

Eskom will explain itself to the public in a media release next week and 
until then cannot respond to media enquiries.

That's the word from the office of Bongani Mqwababa, finance director, 
who this week urged government to close SA to big new industrial 
projects until 2013 when electricity supply is expected to improve.

That statement amounts to stalling new job generation for another six 
years.

Dr Johan van Zyl, president of the National Association of Automobile 
Manufacturers of SA (Naamsa) and CEO of Toyota, said the statement was 
"very, very worrying".

Through Business Unity SA, Naamsa will seek urgent clarification of 
Eskom's stance.

Said Van Zyl: "Several of our members have expanded, or are doing so. 
They need power. A decision is pending on BMW's new models. Daimler 
Chrysler and VWSA have completed their investments. If SA wants to 
supply global markets, we have to produce bigger volumes, so Eskom's 
statement is really worrying."

Bill Stephens, spokesperson for VWSA, said Mqwababa's statement was 
unacceptable.

"We can't put our future development on hold, pending Eskom's ability to 
supply. We have a four to five year product cycle. Each new model 
entails a very large investment in a new line and that new line needs 
power."

Nqwababa wants the Rio Tinto Alcan aluminium smelter at Coega to be 
delayed but Rio Tinto stated yesterday that the project will go ahead. 
It has secured a 25-year supply contract from Eskom.

SA's power monopoly is under siege over its rolling blackouts with 
government, mining, industry, commerce and the general public baying for 
blood.

Shops, cinemas, restaurants, petrol stations and even cellphone 
communications are stopped dead without notice as power fails. Traffic 
lights fail, causing total gridlock in built-up areas. Businesses and 
households have scrambled to buy generators.

The impact on consumer and investor morale has been dramatic. People 
unable to work, or even get a cup of coffee, those who spend 90 minutes 
in the traffic instead of 45 and can't watch TV get the feeling that 
civilised life in SA is in jeopardy. To many, Eskom's frequent 
black-outs appear a first step towards another Zimbabwe.

The Public Protector has demanded an explanation. This may explain 
Eskom's decision to put out a considered statement only next week.

Eskom has done a better job of communicating with its large scale 
industrial clients than it has with the general public.

Recognising that the country cannot afford plant and mine shutdowns, 
Eskom is also subjecting mines and industry to fewer power outages.

Van Zyl said Toyota's stamping plant has been affected by blackouts but 
not its main plant in Durban.

"Our sales and marketing operations have been plunged into darkness and 
have had to buy their own generators but our suppliers are worst 
affected. Because they can't provide parts, our production in Durban has 
been affected."

Both Nissan and VWSA reported that they have not yet suffered any cuts 
so far.

Nissan said: "We have future volume expansion projects, but fortunately 
have not had any Eskom electricity supply interruptions recently. Should 
our electricity supply be interrupted, it will affect us severely since 
production will be stopped completely.

"Going forward, we hope that our production plant will not be affected 
to any significant degree in the short to medium term. We will, however, 
monitor the situation stringently and continue to seek alternative power 
supply sources to minimise disruption by power cuts.

Nissan said outages would affect not only its plant but those of its 
component makers and other suppliers.

Anglo American will not comment until the type of industrial delays 
suggested by Mqwababa are official Eskom policy. It admits that such a 
policy would be negative for some of its large investment projects.

The Chamber of Mines does not comment on the operational aspects of its 
members. The Bombela-Gautrain project and BHP Billiton were also mum.

Rand Refinery CEO Alan Muir said Eskom was sticking to its power cut 
schedules but even this vital strategic plant's production is suffering. 
Rand Refinery has to shut down its arc furnace frequently.

Delays at Rand Refinery cost mines heavily because they do not get paid 
for their production until bullion is brought close to 100% purity from 
the 87% purity attained at the mines themselves.