DESPITE production improvements, BHP Billiton’s Richards Bay smelters remain vulnerable, with profitability significantly reduced owing to depressed global aluminium prices.
And any major increases in electricity tariffs could have disastrous consequences for both the smelters and the regional economy.
Speaking at a community stakeholder engagement meeting, Asset President Lucas Msimanga said the issue was a critical one.
‘At the current prices about 60% of the aluminium industry is under water.
‘This is driven by the global slowdown and excessive stocks in the world.
‘Owing to its old technology, Bayside has been running at a loss for the past 18 months or more, while Hillside has been barely at break-even point.
‘The key therefore is the sustainability of the smelting business, with productivity and disciplined cost control critical to the business,’ said Msimanga.
‘While we have legal contracts, the ongoing issues raised by Eskom are concerning as any change would make the business not viable.
‘We believe the benefit of the smelters to the region and the country is too significant to be given up.
‘Our vision is to continue making a difference in the society including transformation and growing downstream industry.
Asset integrity
Msimanga referred to Bayside being ‘an old plant and cash strapped’.
General Manager Craig Ullbricht confirmed a tough year, but that Bayside is working hard to avoid further concerns and stack complaints and said R30-million has been spent on the ESP project that is doing well with operations under control.
Msimanga said Hillside smelter had fully recovered from the production challenges suffered in 2012.
‘The work in the last 18 months has been to restore the asset integrity to ensure efficient processes.
‘Whilst previously there were a number of unplanned fume abatement stoppages, this has reduced.
‘In the last two quarters Hillside achieved two consecutive record productions, with improved quality.
‘We are also continuously driving costs down by focusing on efficiencies and eliminating wastage.’
Head of External Affairs, Aroon Patel, confirmed that over the last five years R300-million has been spent in the greater uMhlathuze community.
He noted that the BHP Billiton Enterprise Development and Supplier Centre, launched in June, has hosted the Department of Trade and Industries and a number of national and local ministers, including two Premiers.
He confirmed that RBM has expressed an interest in coming on board at the centre due to having common objectives and avoiding duplication.
