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South32 welcomes competitive Nersa energy deal

By Banele Ginindza 7h in the past

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South32 hit the candy spot with the National Energy Regulator of South Africa (Nersa) approving a rand baseline energy provide settlement for its Hillside Aluminium smelter to proceed at the least till 2031.

Mining agency South32 hit the candy spot with the National Energy Regulator of South Africa (Nersa) approving a rand based mostly energy provide settlement for its Hillside Aluminium smelter to proceed at the least till 2031.

The settlement secures the smelter’s energy provide below a tariff that’s South African rand-based with a rate of escalation linked to the South African producer worth index.

The new settlement replaces contracts which in some instances have been US dollar-based and linked to the aluminium worth on the London Metals Exchange.

’’With the brand new tariff agreed, Hillside stays competitively positioned on the worldwide smelter value curve, with working unit prices for FY21 (full year 2021) reflecting the upper energy costs from the brand new settlement incurred since August 1 final year,” the mining agency introduced on the Johannesburg Stock Exchange News Service on Friday.

South32 chief government Graham Kerr mentioned on Friday: “We welcome the new agreement which further extends the long-term working relationship between South32 and Eskom. Hillside has been a major Eskom customer for 25 years and this agreement provides power cost certainty for a further 10 years, with Eskom receiving a price aligned to long-term tariff policy.’’

“Eskom also retains the current flexibility to interrupt supply to the smelter to support management of the national electricity grid and minimise load shedding.”

In South32’s June 2021 quarterly report launched earlier this month, it mentioned Hillside Aluminium saleable manufacturing had decreased by 1 kt (kiloton) to 717kt in full year because the smelter continued to check its most technical capability, regardless of the affect to manufacturing from elevated load shedding.

Sales decreased by 12 p.c within the June 2021 quarter as ongoing congestion within the world freight market led to a slipped cargo on the finish of the interval.

It had forecast that the second half of the total year 2021 working unit prices have been anticipated to extend half-on-half for the primary half full year 2021 $1 536 a ton (R22 797) for the smelter reflecting a stronger South African rand, and better uncooked materials enter and freight prices.

South32 mentioned the smelter remained an necessary contributor to South Africa’s economic system, each instantly by way of native employment and thru its integration with vital downstream industries that relied on Hillside’s output.


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