Power Cuts To Aluminum Smelters Unsafe Long Term-BHP

LONDON -(Dow Jones)- A compulsory 10% reduction in power supply to BHP Billiton’s (BHP) aluminum smelters isn’t safe or sustainable long term, the company said Wednesday.

"BHP Billiton reduced electricity demand at its three aluminum smelters in Southern Africa by 10% on instruction from Eskom, which is unable to supply sufficient electricity," BHP Billiton spokesman Illtud Harri said in an e-mailed statement. "However, this method of operating is unsafe and unsustainable in the long term."

BHP is the world’s sixth biggest producer of primary aluminum and one of South Africa’s largest consumers of electricity.

The price of aluminum on the London Metal Exchange has soared on supply concerns since the initial power shortages began mid January to hit a new 22-month high of $3,110 a metric ton Wednesday.

BHP’s Hillside and Bayside aluminum smelters in South Africa and the Mozal smelter in Mozambique together produced 1.163 million tons of aluminum in the financial year ended June 2007.

BHP Billiton said in the statement it has investigated several possible options to maintain the mandatory 10% power reduction over a period of years.

"These are being discussed with Eskom and we are not able to disclose the contents of those discussions," BHP Billiton said.