South Africa’s state power utility Eskom and mining company South32 have begun discussions on a long-term energy solution for the Hillside Aluminium smelter, one of the largest industrial operations on the continent.
The proposed agreement, expected to take effect from 2031 when the current electricity contract expires, aims to introduce renewable energy into the smelter’s power supply while maintaining operational stability.
Located in KwaZulu-Natal, Hillside is the largest aluminium smelter in the Southern Hemisphere and a critical component of South Africa’s industrial base.
Balancing energy demand with decarbonisation goals
The smelter consumes approximately 10.3 terawatt-hours of electricity annually, making it the single largest electricity user in the country and accounting for around 5% of Eskom’s total energy sales.
To address both its energy needs and environmental considerations, Eskom and South32 have established a joint working group tasked with exploring ways to integrate competitively priced renewable energy into the national grid.
This includes assessing mechanisms to ensure reliable supply through firming capacity, a key requirement given the intermittent nature of renewable energy sources.
Officials say the initiative aligns with South Africa’s broader efforts to transition to a lower-carbon economy while maintaining industrial competitiveness.
Economic impact and historical context
Hillside plays a significant role in the national economy, supporting thousands of direct and indirect jobs and supplying aluminium to downstream industries.
However, its energy consumption and pricing arrangements have long been a topic of debate. Historically, the smelter benefited from preferential tariffs linked to global aluminium prices and exchange rates, a system introduced in the 1990s when Eskom had surplus capacity.
In recent years, as South Africa has grappled with electricity shortages, these agreements have come under increased scrutiny.
Investigations have highlighted the scale of the discounts granted to large industrial users, raising questions about cost distribution within the energy sector.
Despite these concerns, stakeholders argue that maintaining operations at Hillside is essential for economic stability, particularly in regions reliant on industrial activity.
The new renewable energy proposal is therefore seen as an opportunity to modernise the facility’s power supply while addressing both sustainability and economic priorities.
If successfully implemented, the partnership could serve as a model for how energy-intensive industries transition toward cleaner power sources without compromising productivity.
Source: Eskom and South32 statements, industry reports
