Shut down the aluminium smelters

Friday’s news that South Africa’s gold and platinum mines had been forced to suspend operations because Eskom could no longer guarantee the power supply has emphasised just how bad our electricity crisis has become. We can switch off lights, swimming pool pumps and geysers to our heart’s content but the reality is that we need immediate access to more power and I would suggest that one way to do this would be to shut down BHP Billiton’s three aluminium smelters

Aluminium is jokingly referred to by some in the industry as molten electricity and it is not hard to see why. Between them the Richards Bay-based Hillside and Bayside smelters and the Mozambique-based Mozal smelter employ around 7 000 employees and contractors and use 2 150MW of electricity, around 5,5% of Eskom’s total capacity.

These aluminium smelters operate on our coasts because they have contracts guaranteeing a supply of the cheapest electricity in the world. For the most part, alumina is shipped in from BHP Billiton’s operations in Australia and Brazil, processed at the smelters and shipped directly out again to their end destination. They need a constant supply of power — load-shedding can be disastrous to these operations, resulting in whole potlines having to be replaced at a cost of hundreds of millions of dollars.

Here’s what I think the government should do:

Shut down and mothball the Hillside, Bayside and Mozal smelters as quickly as possible. These smelters face disruptions anyway, and there may be benefits in shutting down operations in a orderly manner.
Pay the full salaries of every single employee and contractor for as long as these operations are down.
Give BHP Billiton whatever penalties/tax breaks it needs so that shutting these operations down do not effect their profit margins.
Cancel the ill conceived 1 150MW Rio Tinto Alcan smelter that is planned for Coega in 2010. Pay the fines and penalties for cancelling this operation.

This move would not be popular with BHP Billiton or Rio Tinto, but it is time to make pragmatic decisions that will benefit the whole economy. By doing this we could bring the equivalent of a Koeberg power station online within a few months. This, combined with the other power saving suggestions, could be enough to minimise the effects of load-shedding on the mines, factories and small businesses that power our economy and save us from the mass layoffs and closures that are likely to happen if the current situation prevails.