Global mining giant BHP Billiton is to cut aluminium production by a 120 000 tons per annum as a result of South Africa's power crisis. The total monetary value of the lost production is R3 Billion at current market prices. This will obviously impact on BHP Billiton's bottom line , but of more concern is the impact on South Africa's worsening current account deficit.
BHP Billiton will cut production at all three of its smelters with the largest cuts coming from the Bayside smelter. BHP has already begun consultations with employees regarding the closure of some operations. Read the full story at Moneyweb. The power crisis and Eskom's loadshedding program are likely to result in more financial and job losses to the South African economy.
And the chairman of the Eskom board says that if there were no big aluminium smelters, there would be no power crisis.
So it looks like a chicken and eggs situation.
[...] last year, Platinum production fell by 15.9%. BHP Billiton also recently announced that it was cutting aluminum production by 120 000 tons per [...]