HomeIndustrial MineralsProduction cutbacks cost BHP Billiton billions

Production cutbacks cost BHP Billiton billions

BHP Billiton’s Mozal
smelter, situated in
southern Mozambique
Johannesburg, South Africa — MININGREVIEW.COM — 26 March, 2008 – The South African power crisis is expected to cost BHP Billiton – the world’s largest diversified resources company – close to R3 billion in lost aluminium production because of cutbacks at its three smelters in southern Africa.
In a statement issued here yesterday, the company explained that this decision resulted from the inability of State-owned power utility Eskom Holdings Ltd to supply sufficient power to meet demand. BHP Billiton has, on instruction from Eskom, reduced its power consumption by 10% across the company’s three smelters in southern Africa. “However, this operating methodology is unsustainable,” the statement added, “and we undertook an assessment of options to deal more effectively with a longer-term reduction in power.”

As a result of this assessment, said the statement, “we plan to take the bulk of the power reduction at the Bayside smelter at Richards Bay(100 per cent owned by BHP Billiton), while Hillside (also at Richards Bay) and Mozal (in southern Mozambique) will continue at reduced operating levels to comply with the 10 per cent mandatory overall power demand reduction.”

The jobs of some 400 employees and 500 contractors may be affected as a result but BHP Billiton spokesperson Bronwyn Wilkinson has confirmed that the group will do everything it can to minimise the impact. “We therefore commenced consultations with our employees about a possible closure of operations of the B and C pot-lines at the Bayside aluminium smelter,” she said.

Today’s BHP Billiton statement confirms that, following consultations with employees and their representatives, there were no feasible alternative proposals to the closure. The ramp-down process began yesterday and will take approximately two months to complete.

The three BHP Billiton smelters have a combined annual production capacity of 1.2 Mt of aluminium. According to Wilkinson the total annual production loss will be 120 000t across all three smelters, of which 92 000t will come from Bayside.