[miningmx.com] — On Monday, amid serious concern about electricity security this winter, the hearing of a court application by Media24 to force Eskom and BHP Billiton to disclose the pricing formula for the supply of 2 000MW of electricity to Billiton’s two aluminium smelters gets under way.
The court case is to be heard on Monday and Tuesday in the South Gauteng High Court in Johannesburg.
Sake24, as Media24’s business unit, is applying for the disclosure of the pricing formula in terms of which electricity is being supplied to the two smelters, the identity of the signatories to the contracts for delivery of this electricity, and the terms of the contracts.
The contracts were concluded the 1990s, but a confidential industrial report that DA MP Pieter van Dalen revealed in Parliament last year shows that in 2009 electricity was being supplied to the smelters for as little as 12c per kilowatt hour.
Eskom’s average production cost for electricity during that year was 24.3c per kilowatt hour and the average price at which it was selling electricity was 31c per kilowatt hour.
In Johannesburg Eskom’s average price for that year was 50c per kilowatt hour.
The two plants together consume about 2 000MW or 5.7% of Eskom’s generation capacity. In August 2009 the two contracts’ negative impact on Eskom caused the electricity giant to announce that it wanted to renegotiate the contracts.
A new contract for Mozal was concluded in April last year, but there has still been no agreement on a new one for Hillside.
In a sworn affidavit Eskom presented information to the court, but it did not oppose the application.
In court papers Billiton said the disclosure of the pricing formula would negatively affect its competitiveness in the aluminium market because electricity prices for producing aluminium were highly confidential.
Sake24 then submitted a research report by Deutsche Bank to the court, setting out the electricity costs of 159 smelters across the world.
According to this table Hillside was the aluminium smelter with the lowest production costs globally – $959 per ton – and Mozal the fourth lowest at $1 092 per ton. Hillside was reflected as paying $267 for the amount of electricity consumed for every ton of aluminium it produced and Mozal’s energy cost as $244 per ton.
– Sake24
* Fin24 is part of Media24.
