Eskom and mining and minerals company South32 have announced a new renewable electricity solution for the 30-year-old Hillside Aluminium Smelter in KwaZulu-Natal (KZN).
The groups said they are “advancing discussions” on a new, long-term electricity solution for the smelter, targeted to commence in 2031, subject to compliance with all regulatory requirements.
Ambition
Both organisations have reaffirmed their shared ambition to develop and deliver a long-term energy solution that supports Hillside’s competitiveness, contributes to regional economic stability and industrial growth, and aligns with South Africa’s broader decarbonisation objectives.
To support this ambition, South32 and Eskom have established a joint working group to explore mechanisms to bring competitively priced renewable energy into the national grid, backed by affordable firming capacity within the existing regulatory framework.
Benefits to Eskom
The groups said that while this work will help meet Hillside’s long-term energy needs, the solutions being assessed could also benefit Eskom and its broader customer base.
“This marks an important step towards supporting the future of one of Southern Africa’s most important industrial businesses.
“Hillside supports a total of 3 650 direct and indirect jobs, contributes to an estimated 29 000 jobs across the economy, and plays a key role in supplying aluminium to the local downstream industry,” they said.
Securing future
South32 Chief Operating Officer, Noel Pillay, said that as Hillside celebrates 30 years of operation this year, it is collaborating with the Government and Eskom to secure its future for decades to come.
“We have made a solid start. It is important we continue this momentum, working towards a viable, low-carbon energy solution for Hillside from 2031, when the current electricity contract expires.”
Aluminuim
Eskom Group Chief Executive, Dan Marokane, said the utility values the longstanding partnership with South32 and the important role Hillside Aluminium plays in South Africa’s industrial economy.
“Through this joint process, we are working to develop a long-term energy solution that supports industrial competitiveness while advancing South Africa’s transition to a lower-carbon electricity system.
“By exploring innovative mechanisms to integrate renewable energy into the grid with appropriate firming solutions, this collaboration has the potential not only to secure the future of Hillside, but also to contribute to strengthening the resilience and sustainability of the national electricity system for the benefit of all South Africans,” Marokane said.
Largest electricity user
South32’s Hillside Aluminium plant is the largest aluminium smelter in the Southern Hemisphere, producing 720 kilotonnes of aluminium annually.
As South Africa’s single largest electricity user, it consumes roughly 10.3 TWh annually, accounting for about 5% of Eskom’s total annual energy sales.
Open secrets
In 2025, an investigation by Open Secrets laid bare the sweetheart deal that allows South32’s Hillside aluminium smelter to consume about 6% of Eskom’s electricity output while paying roughly half the normal tariff.
That figure rises to nearly 9% when South32’s Mozal smelter in Mozambique is added to the picture.
The extent of the discount enjoyed by South32 is outlined in a negotiated pricing agreement (NPA) that Eskom recently disclosed to Open Secrets.
Responding to a request for comment, South32 pointed to Hillside’s significant contribution to South Africa’s economy, with 2 300 people employed directly and a further 27 400 indirectly.
Preferential tariff
Hillside’s initial preferential tariff was linked to the London Metal Exchange price for aluminium and the US dollar-rand exchange rate, and dates back to the 1990s, when Eskom had surplus power.
Then, it was only too happy to sign up a large anchor consumer capable of absorbing some of this surplus power, but – despite warnings from Eskom and others of a looming power shortage – government sat on its hands until forced to green-light the grossly over-priced and seriously delayed Medupi and Kusile power stations in the late 2000s.
