Dark days for Bay aluminium smelter

IT is a volatile time for South32’s Hillside aluminium smelter in Richards Bay.
The global price for aluminium has plummeted to a 20-year low (around $1.6 per metric ton), leaving South32 in the thorny position where it has to produce aluminium today at the same value it was when the plant was first built in 1996 – when electricity was considerably cheaper.
Putting even more pressure on the company is the persistent drought, which has compelled South32 to establish KZN’s first desalination plant on the Hillside premises.
Speaking at an annual stakeholders’ meeting in Richards Bay last week, South32 Aluminium Vice President Noel Pillay said it is ‘indeed a harsh reality to deal with’.
‘What makes up our total costs are raw materials and consumables at 58%, energy at 22%, labour at 11% and others at 9%.
‘The majority of our costs such as the global price of alumina (raw material) and electricity costs, is out of our control.
‘This business is very much at the mercy of the market.
‘Alumina’s value has come down, but it looks like it will overtake aluminium.
‘The smelter was built here in the first place with the incentive of low-priced power supply.
‘And then it gets increasingly challenging when we have to deal with additional risks like water shortages – an issue we never saw coming.’

Diving into desalination
Pillay emphasised that without water the company will have to shut down.
‘In our business, water is very significant. We had to be quick and decisive to settle on a solution.
‘We had to solve our own problem and control our own destiny.’
The company said it expects the R32-million desalination plant up and running in September.
‘The equipment has already been shipped and delivered, and the piping reticulation system is busy getting set up,’ said Hillside Health, Safety and Environment Superintendent Yogen Chetty.
‘We are grateful to all the parties – our fellow industries, government departments and the public – for the tremendous support and positive feedback on this project.’

Bayside rehabilitation
Bayside Final Operations Manager Paul Venter said the duty of re-instating the decommissioned Bayside site to pristine condition for future use is of paramount importance.
‘The sale of Bayside Casthouse to Isizinda Aluminium was concluded to sustain downstream beneficiation and preserve employment, which was an important milestone.
‘Now we are executing our legal responsibilities to rehabilitate the site.
‘Our future activities will be the rental of the main administration building to the Richards Bay Industrial Development Zone, demolishing identified structures and concluding the EIA (environmental impact assessment) process.’