Coega smelter unplugged – thanks to SA’s power supply woes

South Africa’s power
supply woes have officially
unplugged plans for a
giant aluminium smelter
in the Coega Industrial
Development Zone.
The announcement –
made in a joint statement
by The Department of
Trade and Industry, Eskom,
Industrial Development
Corporation and Rio
Tinto Alcan – states it was
“jointly acknowledged that,
although some progress
was made in discussions
regarding the supply of
electricity to the Coega
aluminium smelter project,
it was insufficient to
proceed”.
This is hardly a surprise
given the power shortages
in South Africa – the Coega
smelter would have used
as much electricity as the
Nelson Mandela Bay metro
– and the main role-players
have already moved on.
Transnet is reconfiguring
the port of Ngqura to
become the country’s
container hub rather than
the original plans for a
32-berth bulk port, and
the Coega Development
Corporation is focusing
on less energy-intensive
operations, apart from a
planned giant PetroSA
refinery, which could
produce some of its own
power from waste gases.
What the formal
aluminium smelter
announcement does call into
question is the future of the
metals cluster planned for
Coega – which is planned
to cater for other smelters,
such as iron, manganese
and stainless steel.
According to the joint
statement “discussions
between Eskom, Rio
Tinto Alcan, IDC, and dti
have continued over the
past several months, but
the parties agree that the
current context regarding
the supply of electricity has changed significantly
and some of the terms of
existing agreements would
require further discussion
and negotiation. The parties
also concur that it is of
utmost importance that
a project like the Coega
aluminium smelter comes
on stream when power is
reliably available and the
facility’s consumption does
not impact the daily needs of
South Africans.
For the Coega
Development Corporation, it
is back to the drawing board
– but the project is far from
dead.
Eskom says plans
to upgrade the Eastern
Cape’s power supply have
not been put on hold.
“Eskom is committed
to the continuation of
the strengthening of the
transmission infrastructure
to the Eastern Cape in order
to cater for future growth in
the area,” says Eskom’s chief
executive, Jacob Maroga in
the statement.
With the port of Ngqura
now on stream, the focus
is expected to shift towards
logistics and trade-related
investment in the Coega
IDZ.