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London - BHP Billiton's aluminium smelters are unlikely to see further production cutbacks unless there is an unforseen and severe deterioration in power generation, utility Eskom and South African metals industry sources said on Wednesday.
The pre-emptive load-shedding to retail electricity customers will remove enough pressure from the grid to stabilise it, Eskom sources said.
"It's very unlikely that the power supply situation will deterioriate to such a pitch that key industrial consumers, including the smelters, would face power cuts which would mean they had to cut production," Eskom spokesperson Andrew Etzinger said.
"Obviously a situation could occur again, as it did a week ago, when problems converge and emergency load-shedding is necessary but this is unlikely to be on a large-enough scale to cause problems for key industrial consumers," he said.
Both Eskom and key industrial users believe the retail consumption cut of 10% will be effective - but this could be a dangerous assumption, South African power industry and coal sources said.
"There are still a great many things which can go wrong, from coal supply to logistics, unexpected problems," one power industry source said. "If there is a real 10% cut in retail consumption it will take pressure off, but this is a very big if."
BHP Billiton does not anticipate further power supply cuts, beyond the current 10% reduction, which would necessitate any further cutbacks to aluminium production at its two South African aluminium smelters or the Mozal plant in Mozambique, a South African industry source said.
BHP produces close to 1.5 million tons a year of aluminium at its three southern African smelters.
The closure of all three plants would have pushed aluminium supply into deficit.
- Reuters