Bloomberg News

BHP Expects Eskom to Honor Contracts to Supply Power to Smelters

April 03, 2013

BHP Billiton Ltd. expects Eskom Holdings SOC Ltd. to honor deals to supply power to its aluminum smelters in South Africa, Xolani Mkhwanazi, chairman of the mining company’s local unit, said in a BusinessDay commentary.

Eskom, the state-run power utility, sells 9 percent of the nation’s electricity at below its cost of production to BHP’s Hillside and Mozal smelters, the Beeld newspaper said March 22.

“The Eskom contracts were negotiated on a risk-sharing basis and in terms of a recognized international model,” Mkhwanazi wrote in Johannesburg-based BusinessDay. “Over the period of contracts BHP Billiton for many years paid above the standard electricity tariff for the industry. Eskom has generated significant additional revenues and benefits.”

The Supreme Couth of Appeal on March 15 granted an order forcing Eskom to disclose tariffs for BHP’s aluminum smelters.

To contact the reporter on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net


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