Smelter rivalry hotting up

Posted On Monday, 11 April 2005 02:00 Published by eProp Commercial Property News
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BHP Billiton set to take the gloves off in defence of its home turf

Property-Housing-ResidentialSPECULATION is mounting about who will build the aluminium smelter that the government has proposed for the Coega industrial development zone.

One thing is certain: BHP Billiton is unlikely to stand idly by while its competitors work to expand their business in Southern Africa, the backyard of its aluminium division.

The company operates three aluminium smelters in the region.

This week Russian aluminium group Sual expressed an interest in becoming involved in the Coega development.

And, Canada’s Alcan said that next month it would release an update of a feasibility study on the construction of a smelter at Coega in the Eastern Cape.

The logical location for an expansion of BHP Billiton’s aluminium business is Africa, but vital for the success of any project would be securing power at an economical rate.

The new head of BHP Billiton’s Southern African aluminium operations, Xolani Mkhwanazi, will play a key role in achieving that.

The company’s Hillside and Bayside aluminium smelters are the biggest users of power in the country and Mkhwanazi appears to have the experience necessary to build a strategy that ensures his company gets the power it needs at the right price. But that will be no easy task.

As part of BHP Billiton’s aluminium team, this doctor of nuclear physics’ long-term challenge is to expand the company’s African aluminium operations.

Mkhwanazi said it was after a discussion with BHP Billiton’s head of aluminium, Alex Vanselow, based in London, that he decided to take his new job and quit his position as head of engineering company Bateman Africa after less than a year.

There has been much speculation about BHP Billiton’s expansion plans and its power-sourcing strategy.

One possibility is that the company will arrange to supply coal to power stations in return for cut-rate electricity.

In the event of a significant expansion of South Africa’s power-generation capacity, BHP Billiton could be a long-term high-consumption customer whose massive payments would contribute to enabling the development of new projects.

“aluminium is bauxite and power,” said Mkhwanazi. “For us to grow here I need to have these things at my fingertips at the right site, the right price and in large quantities.”

BHP Billiton’s aluminium unit has bauxite deposits — the ore from which aluminium is extracted — in Australia, Brazil and Surinam.

“Africa has five or six of the 10 largest rivers in the world, which gives it a huge capacity for the generation of hydroelectric power. It makes sense to look to the rest of Africa for cost-effective energy,” said Mkhwanazi.

After studying in Botswana and the Britain, Mkhwanazi became a lecturer in physics at the University of Swaziland. By that time he was a member of Umkhonto we Sizwe.

“I was a lecturer by day and did ‘other things’ at night.”

When he was arrested for his nocturnal activities, the United Nations arranged for him to be given sanctuary in Australia.

Returning to South Africa in 1992, he joined the Atomic Energy Corporation.

Mkhwanazi then moved to the Council for Scientific and Industrial Research and a few years later joined the National Electricity Regulator (NER).

His six years as the chief executive officer of the government-controlled NER introduced him to the power-generation and electricity distribution industries and to the inner workings of big business.

While with the regulator he proposed a competitive structure for the South African electricity generating and distribution industry.

Last modified on Thursday, 26 June 2014 12:53

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