Unfortunately, I do not know Hannes Prinsloo. I looked on Google and there are about 79 100 hits for Hannes Prinsloo, and, well, sorry, I could not look up all of them.

However, it’s Hannes Prinsloo who wrote the following to a local daily newspaper on August 16: “Dear Sir – In relation to Eskom’s losses due to its supply agreements with aluminium smelters in South Africa, I have not yet seen the following question answered: At which price, to Eskom, BHP Billiton and the broader economy, does it make sense for Eskom to buy one or more smelters from BHP Billiton and close them down permanently? I am sure this question must have been asked behind closed doors, but this may need to be answered in the public domain. At the current price and market conditions for aluminium, this could be the opportunity to do the right thing. Hannes Prinsloo, Victory Park.”

Now many may think that this is a joke. However, while it may be tongue in cheek, it is a brilliant idea.

The two smelters in Richards Bay draw about 1 800 MW on average from Eskom. The power utility gets a very poor revenue return from these, since there are historical power purchase agreements, which often do not cover the costs of Eskom power generation supply to the smelters. Shutting them down would add about 5.6% to the Eskom power pool. If we take the cost of a coal-fired power station as being about $1 500/kW output, then the 1 800 MW which will be available will cost R28.5-billion – overnight.

Since Bayside and Hillside smelters cost about R60-billion and are now a bit old, I think the answer to Prinsloo’s ‘at what price?’ is about R 30-billion. The fact of the matter is that aluminium is not doing very well right now and appears to be in a long-term decline. So, closing them down may just be the ticket. This is not a new suggestion, in fact. I find first reference to the idea by Jaxon Rice on the Mail and Guardian Online in 2008: “Shut down and mothball the Hillside, Bayside and Mozal smelters as quickly as possible. These smelters face disruptions, anyway, and there may be benefits in shutting down operations in a orderly manner. Pay the full salaries of every single employee and contractor for as long as these operations are down. Give BHP Billiton whatever penalties/tax breaks it needs so that shutting these operations down do not affect their profit margins.”

This sentiment was echoed more recently by Chris Yelland in Mining Weekly. But that’s not all! How about this: Richards Bay has power lines which can transfer at least 3 000 MW into the area and has rail links which make it a big coal exporting terminal port. So, why not buy the Bayside and Hillside smelters, knock them down and build another coal-fired power station? The new station will hardly cause any more pollution than existing industries (not with the modern desulphurisation plants) and, instead of sending all that lovely coal to the UK to power the Drax power station, we can send it to Richards Bay instead.

Since the removal of Bayside and Hillside would effectively give Eskom 1 800 MW and a new station, we can pitch at, say, a modest 3 600 MW. The whole exercise would give a net gain of a very useful 5 400 MW. Not to be sniffed at.

Oh, there will be a few minor issues, such as how to stop the ruling party from owning 25% of the equipment suppliers (through the ruling party owned Chancellor House, which owns 25% of the Medupi boiler supplier, Hitachi) and how to stop the costs from rising faster than Brian Habana with the touchline in sight.

The best way is to ask Billiton to build, own and operate the new power station and sell power to Eskom – this time on the open market. This solves a whole lot of problems: labour, investments, land, corruption. I tell you, it is the best idea since the paper clip. Well done, Prinsloo. I really mean it.