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.