BHP are exploring offshore gas fields along South Africa’s west coast.
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BHP are exploring offshore gas fields along South Africa's west coast.

CAPE TOWN (Reuters) – BHP Billiton said on Friday power shortages in South Africa had caused a decline of 8.2 percent total production at its three aluminium smelters.

The three smelters, two in South Africa and one in Mozambique have a combined capacity of some 1.43 million tonnes, or about 3.7 percent of world output.

Power shortages in Africa’s strongest economy have this year hit key mining, smelter and manufacturing sectors.

However, Vincent Maphai, chairman of BHP’s southern Africa region, told Reuters it would be “very difficult” to agree to a proposal from state-owned power utility Eskom to buy back power from energy-intensive users such as smelters as Eskom sought to shore up an underpressure national power grid.

“There hasn’t been any agreement and this is something we would find very difficult to accede to,” Maphai said in an interview.

BHP is the the world’s largest diversified mining company, and besides being a major power consumer, also provided 15 million tonnes of coal a year to Eskom as part of long-term contracts ending in 2012-2015.

Maphai said Eskom coal supplies had no impact on the group’s coal exports, as dwindling global supplies boosted prices for the scarce commodity.

He said BHP invested $1.25 billion to upgrade and develop its coal pits in South Africa, one of the world’s top coal exporters, and recent political turmoil was no reason to reassess new investments, which included exploring offshore gas fields along South Africa’s west coast.

“There is nothing in the country politically that is forcing us to reassess what we are doing,” he said, amid investors fears South Africa would take a left-leaning economic approach following the ouster of business-friendly President Thabo Mbeki.


Maphai said political stability in resource-rich, but under-explored Africa, was critical for future investment as the continent sought to take advantage of a commodities boom driven by consumption in China, India and Brazil, despite a global economic downturn.

“(Political) stability in Zimbabwe is critical, stability in the DRC is very critical for us, Angola is very critical and Guinea,” he said, adding that BHP did not have investments in Zimbabwe but was monitoring the situation in the mineral-rich country closely.

Maphai said BHP, which did not have much exposure to gold and platinum deep-mining projects, was cagey about entering this market because of safety concerns despite record-high prices.

“We are very very cagey with deep-mining, whether it’s platinum or gold, simply because we are very serious about our zero-harm policy,” he said.

Maphai said BHP tended to shy away from projects associated with fatalities, but did not rule out future investment in platinum mines, as South Africa miners battled mine deaths and government closure of pits as a result.

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