The business in South Africa that consumes enough electricity to cause a stage of load-shedding

South Africa’s biggest power consumers are mining smelters, which require loads of electricity to heat up furnaces to process mineral ore into pure metal or metal alloys.

South32’s Hillside aluminium smelter in Richards Bay is the country’s biggest single electricity consumer, accounting for roughly 5% of Eskom’s total energy sales in a year.

The facility is the only aluminium smelter in South Africa and the largest in the southern hemisphere. It produced 720 kilotonnes of aluminium in its last financial year.

Aluminium is a lightweight metal valued for being soft and malleable yet robust against light or atmospheric corrosion.

It is used in a wide range of products — from cans and kitchen utensils to aeroplane parts and beer kegs.

Aluminium is also popular in high-end tech, such as thin-and-light laptops, and is increasingly being used as an alternative to copper in power lines and cables.

The Hillside facility consumes roughly 10.3 terawatt-hours (TWh) of electricity annually to produce this valuable material.

The facility’s peak draw of 1,205MW is also more than the electricity demand cut from the grid during one stage of load-shedding.

Smelters are just one part of the minerals supply chain that consumes a lot of power.

Large and powerful mining machinery can also have significant power draws — especially over short periods.

For example, the motors turning winders on large and heavy mine shafts can draw multiple megawatts of power.

Within a few seconds of operation, the electricity they consume can easily be worth over R1,000.

Iron and steel producers like ArcelorMittal and fuel refineries like those operated by Sasol also consume vast amounts of energy from Eskom’s grid.

Overall, industrial customers, including mines, smelters, and refineries consume a combined 30% of Eskom’s electricity.

Although their demand on the grid is significant, the actual proportion of revenue they contribute to Eskom’s coffers is much lower.

Cheaper tariffs mired in mystery

Eskom’s major industrial customers enjoy special preferential tariffs under negotiated pricing agreements.

However, precisely what discounts these customers are getting is unknown, as the details of the deals are not shared with the public.

The customers are also part of Eskom’s load curtailment programme, allowing them to sidestep load-shedding as long as they reduce their demand by a certain amount when the grid is constrained, as instructed by the System Operator.

These special arrangements are justified on the basis of the large industrial customers’ substantial contributions to the economy.

However, the Democratic Alliance has called on Eskom and the National Energy Regulator of South Africa to be transparent with the public about these agreements.

The party’s spokesperson on electricity and energy, Kevin Mileham, recently accused Eskom of continuing to conceal the critical details of its agreements.

Mileham said the power utility charges intensive energy users and neighbouring countries a much lower tariff than South African homes and businesses.

“Eskom’s failure to disclose the revenue generated from these agreements raises questions about whether these deals truly benefit the economy or merely serve the interests of a few at the expense of the public,” Mileham said.

“In a presentation by Eskom to Parliament’s Portfolio Committee on Electricity and Energy this week, it was revealed that 17.27% of Eskom’s electricity consumed is billed either through negotiated pricing agreements or international sales,” Mileham said.

“What is shocking is that this 17.27% only generates 8.5% of Eskom’s revenue from the sale of electricity.”

Mileham said that a court ruling in 2011 underscored Eskom’s obligation to make this information public.

“This is not merely a matter of financial transparency, but a fundamental issue of economic justice,” Mileham argued.

“Eskom cannot continue to hide behind a veil of administrative opacity while ordinary South Africans shoulder an increasingly unsustainable electricity pricing burden in the face of increasing load-shedding.”