• Companies seek low-cost renewable energy solution before 2031 contract expiry

• Hillside is Eskom’s largest single power user, accounting for about 5% of sales

• Project follows shutdown of Mozal smelter over energy cost disputes

Eskom and mining group South32 are working on a plan to supply renewable energy to the Hillside aluminum smelter in South Africa, as both companies prepare for the end of a long-standing electricity contract.

The proposed solution is expected to be in place by 2031, when the current discounted power agreement between Eskom and the Hillside plant expires, according to a joint statement released on April 28.

Without a new arrangement, the smelter would face standard electricity tariffs, which have increased sharply over the past decade and have already led to the closure of several similar facilities across the country.

Located in Richards Bay, Hillside is the largest aluminum smelter in the Southern Hemisphere, with an annual capacity of 720,000 tons. It consumes about 10.3 TWh of electricity each year, making it Eskom’s largest individual customer and accounting for around 5% of its total electricity sales. At peak demand, the plant can draw up to 1,205 MW, roughly equivalent to the capacity shed during a Stage 1 power cut in South Africa.

To address the upcoming transition, Eskom and South32 have set up a joint working group to explore ways to integrate competitively priced renewable energy into the national grid.

Eskom’s chief executive said the goal is to develop a long-term energy solution that maintains industrial competitiveness while supporting South Africa’s shift toward a lower-carbon power system. South32’s operations chief emphasized the need to secure a viable low-carbon energy supply for Hillside before the current contract expires.

The discussions come after South32 shut down its Mozal smelter in Mozambique in March, following six years of unsuccessful negotiations to secure affordable electricity. The closure led to about 5,000 job losses and removed one of Mozambique’s largest industrial employers, which accounted for around 30% of the country’s manufacturing output and more than 3% of its GDP.

The stakes at Hillside are also significant. The smelter supports about 3,650 direct and indirect jobs and contributes to roughly 29,000 jobs across the wider economy. It also supplies about 30% of its output to local downstream industries, including aluminum producer Hulamin.

Abdel-Latif Boureima