Page 16 - EngineerIT June July 2025
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ENERGY
Power play or pricey perk? Eskom’s secret
smelter deals under fire
By Chris Yelland on the Eskom Megaflex tariff, and the embattled industry. Electricity
amounts to a discount of some Minister Kgosientsho Ramokgopa has
skom’s secretive electricity discounts R10bn a year. Despite assurances defended the incentives, citing jobs,
to aluminium and ferrochrome that Eskom receives operational foreign exchange earnings, and the
Esmelters have come under sharp benefits from the interruptible nature strategic value of keeping smelters
scrutiny following the release of a new of the Hillside supply arrangement, operational.
briefing note by Meridian Economics, Meridian estimates that a 1.2 GW
which exposes the costly impacts of 2-hour battery energy storage But critics argue these deals distort
these long-running Negotiated Pricing system (BESS) would provide the energy markets, deepen Eskom’s
Agreements (NPAs) on the power utility same benefits at a price estimated financial woes, and burden other
and South Africa’s economy. The briefing at R3bn per year, indicating a net consumers with higher tariffs. “The
focuses on the 1100 MW Hillside aluminium subsidy to the private sector Hillside opportunity cost of supplying cheap
smelter in Richards Bay, owned by plant of about R7bn per year from electricity to energy-intensive, low-
South32, which consumes 10.3 TWh of this deal alone, with further subsidies employment industries is immense,”
electricity per year – about 5.6% of Eskom’s being extended to the struggling said Meridian director Dr. Grove Steyn,
sales – under an opaque, long-term NPA ferrochrome and alloys sectors. calling for a full policy and economic
set to run until 2031. review of NPA arrangements.
Cabinet recently approved new
Hillside effectively receives a 50% discount price support for ferrochrome To see an archive of all energy and
for electricity over the life of the NPA, producers, alongside chrome ore electricity sector roundups to date,
compared to other large customers export controls aimed at revitalising visit: www.eebi.co.za/news
16 | EngineerIT June/July 2025
