Why is government considering saving electricity-hungry smelters?
According to the Minerals Council of South Africa, with the use of smelters, the mineral sector consumes about 30% of Eskom’s output.
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Stephen Grootes speaks to Cris Yelland, managing director, EE Business Intelligence about the South African government's efforts to bolster support for electricity-intensive smelters.
Listen to the interview in the audio player below.
According to a report in News24, Electricity minister Kgosientsho Ramakgopa is keen to restart smelters that have been closed in recent years.
A smelter is a facility where metal is extracted from its ore by heating and melting, and is an essential component in the mining and minerals industries.
Smelters use copious amounts of electricity, and in an energy scarce country like South Africa, switching on more smelters could put further strain on an already unstable electricity grid.
According to The Minerals Council of South Africa, the mining sector consumes about 14% of Eskom’s electricity. Adding smelters and refineries, the mineral sector consumes about 30% of Eskom’s output.
Government subsides the mining and mineral industries high energy costs, to ensure it continues to produce and export valuable minerals.
Hillside Aluminium in Richards Bay is the largest aluminium smelter in the southern hemisphere, producing aluminium for the domestic and export markets.
Speaking to Stephen Grootes on The Money Show, Chris Yelland, managing director, EE Business Intelligence says he's not convince by the minister's plan.
"I don't think there really is any way that you can make it competitive, other than subsidising the price of electricity, thereby reducing major input costs, but then other parts of the economy pay for it."
- Chris Yelland, managing director - EE Business Intelligence
"I don't think it does the economy any good to subsidise and extend the life of non-competitive industries..."
- Chris Yelland, managing director - EE Business Intelligence
"We have a shortage of electricity. Now by giving certain industries lower than cost prices, is seriously impacting the economy."
- Chris Yelland, managing director - EE Business Intelligence
Scroll to the top of the article to listen to the full interview.