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Erwin: Alcan smelter to go ahead at Coega January 28, 2008

Posted by Andreas in "The Economy", activism, Climate change, Coega, Environment, Global warming, News, South Africa.
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Just when you thought some of the people who make the decisions around here had seen the light, another idiot insists on wearing blinkers, sun glasses and a welder’s helmet all at the same time!

Alec Erwin, the Minister of Public Enterprises (don’t you just love him so!?) has put paid to the suggestion that the painfully stupid idea of letting Canadian giant company Alcan build an energy-draining aluminium smelter at Coega might be, well… really, really stupid. He was quoted in the Weekend Argus as saying:

There is no question of stopping contracted projects or freezing any new projects. Energy crisis… what energy crisis?

OK, I may have added the last sentence…

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No aluminium smelter for Coega!? January 18, 2008

Posted by Andreas in "The Economy", activism, Climate change, Coega, Environment, Global warming, Press Release, South Africa.
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Here’s some good news for a change: after sustained protest by local activists, the ludicrous idea of building an energy guzzling aluminium smelter in the Eastern Cape might actually be shelved – hopefully for good!

Press Release: Eskom may Delay Alcan Smelter until 2013
Earthlife Africa Jhb
17th of January 2008

According to an article in today’s [17 Jan 2008] Business Report (“Shelve new projects, Eskom warns”), Eskom financial director is asking the Government to stop marketing South Africa as a low-cost electricity investment centre. This would include delaying, until 2013, the controversial and proposed Alcan aluminium smelter at Coega. The Alcan was the subject of intense civil society, local Port Elizabeth, and international opposition in 2007.

Eskom’s financial director, Mr. Bongani Nqwababa, is reported to have said, in regards to the Alcan smelter, that, “Eskom needs to review supply to Coega”, and that paying penalties for the delaying the project would be cheaper than building a new power station, which is what the proposed smelter would require.

Earthlife Africa Jhb welcomes this reasoned and enlightened viewpoint and hopes that this is the beginning of responsible energy supply planning, especially in the current climate of load shedding. Responsible energy planning requires demand management and industrial energy efficiency.

Next Wednesday, Cabinet meets to discuss energy supply problems. Earthlife Africa Jhb urges Cabinet to reject the tariff policy (the Developmental Electricity Pricing Programme (DEPP)) under which the 25-year contract with Alcan was signed. Abandoning the DEPP would help to ensure security of electricity supply for South Africa’s ordinary citizens.

As explained below, the DEPP ensures that contracts between the State and foreign corporations remain secret and not for public review. This is extremely anti-democratic.

The Energy Policy Officer of Earthlife Africa Jhb, Tristen Taylor, states, “The big question that should be asked when Eskom turns off the lights is; why, if Eskom can’t supply electricity to the citizens of this country, is it offering foreign companies large amounts of power at reduced tariffs? Must individuals and small businesses suffer so that large industries can be assured profit? It seems that Mr. Nqwababa understands these questions and has suggested it would be irresponsible to supply the Canadian multinational corporation Alcan before supplying electricity to the citizens and voters of this country.”

Alcan & Electricity Supply Background

Via the Developmental Electricity Pricing Programme, Eskom and the Government have committed themselves to large-scale supply of electricity to foreign companies at reduced tariffs; this at a time when Eskom struggles to supply citizens with electricity. Thirty percent of all South Africans are still not connected to the electricity grid.

The electricity supply deal to the Canadian aluminium-smelting firm Alcan was the first and to date the only deal to be signed under the DEPP.

For the past two years, Earthlife Africa Jhb has consistently called upon the Department of Trade and Industry (DTI), the Department of Public Enterprises, Eskom and Alcan to disclose the details of electricity sales to Alcan for its proposed smelter. Both the South African Government and Alcan have hidden behind a profoundly anti-democratic clause in the Developmental Electricity Pricing Programme (DEPP). Alcan is the first foreign company to benefit from the DEPP, and has signed a 25-year deal for 1350MW supply of electricity. This represents about 4% of the entire country’s usage.

What is the DEPP? Essentially, the DEPP provides for uniquely discounted electricity tariffs for foreign industries that are heavy consumers of electricity (over 50MW) in South Africa. In return for investment in South Africa, the DEPP will ensure that electricity tariffs are internationally competitive (our nearest competitor is Australia, which sells electricity at US$0.053 per kWh and is 30% more expensive) and that the industry in question can achieve an profitable internal rate of return; i.e. if electricity is a major overhead (such as in aluminium smelting), it the tariff will be low enough to ensure profit.

This is a significant incentive for heavy industry to invest in South Africa and is supposed to provide significant jobs. However, what it really does is commit Eskom to tariffs for heavy industry at a rate lower (or, at most, on par with the next cheapest supplier of electricity) than anywhere else. It is, in effective, a subsidy for foreign industries, similar to a tax break or import duty waiver.

The most worrying factor about the DEPP is the “built-in” secrecy clause. Eskom is a public enterprise, ultimately owned by the citizenry at large. However, the DEPP guidelines ensure that any contracts signed under the DEPP are to remain secret. This is profoundly anti-democratic. The DEPP states (clause 12.1):

All officials, employees or members of the Department, the adjudication committee, NERSA, Eskom and non Eskom distributors shall regard as confidential all technical information, records, particularly any strategic commercial information and all knowledge that pertains to any project that applied for benefits in terms of DEPP, whether such information is recorded on paper or in an electronic manner.

The very next clause (12.2) in the guidelines bounds individuals with knowledge about the contracts to silence for the rest of their lives.

If the DEPP is a method for promoting growth and development in South Africa, why then the secrecy? Why shouldn’t this be in the public domain? This clause gives foreign corporations like Alcan the right to build electricity-intensive industrial plant in South Africa, get electricity on favourable terms in relation to their expected rate of return, and not to have to tell the country at large what rate they purchased electricity from the South African state. Further, this clause seems at odds with the spirit of the Promotion of Access to Information Act, through a pre-emptive strike against the releasing of information.

The DEPP deal with Alcan means that the citizens of this country won’t know the answers to the following questions:

* What is the price of electricity agreed upon by Alcan and Eskom?
* What are the conditions of supply of electricity?
* Will the price paid to Eskom cover the indirect costs of smelter? For example, the environmental group TWIG has calculated that the indirect costs of harm to the environment based on Eskom CO2 emissions to supply the smelter with electricity would be R6.4 billion.
For more information, please contact:

Tristen Taylor
Energy Policy Officer
Earthlife Africa-Johannesburg Branch
Tel: +27 11 339 3662
Fax: +27 11 339 3270
Cell: +27 84 250 2434
Email: tristen@earthlife.org.za

Global Day of Action Against Alcan September 12, 2007

Posted by Andreas in activism, Coega, Environment, News, Press Release, South Africa.
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Press Release: Global Day of Action Against Alcan
Earthlife Africa Jhb
10th of September 2007

On the 12th of September 2007, Earthlife Africa Jhb and various community orgainsations will be marching on Alcan headquarters to protest Alcan’s preferential tariff rates and to demand increased basic access to electricity. This action is in conjunction with actions against Alcan, Rio Tinto, and Alcoa across the globe.

The march will begin at 10:30am at the corner of West & Rivonia in Sandton, Johannesburg. The march will end at Alcan’s office (Fredman Towers, corner Fredman and Bute, Sandton).

For the past two years, Earthlife Africa Jhb has consistently called upon the Department of Trade and Industry (DTI), the Department of Public Enterprises, Eskom and Alcan to disclose the details of electricity sales to Alcan for its proposed smelter. Both the South African Government and Alcan have hidden behind a profoundly anti-democratic clause in the Developmental Electricity Pricing Programme (DEPP). Alcan is the first foreign company to benefit from the DEPP, and has signed a 25 year deal for 1350MW supply of electricity.

What is the DEPP? Essentially, the DEPP provides for uniquely discounted electricity tariffs for foreign industries that are heavy consumers of electricity (over 50MW) in South Africa. In return for investment in South Africa, the DEPP will ensure that electricity tariffs are internationally competitive (our nearest competitor is Australia, which sells electricity at US$0.053 per kwh and is 30% more expensive) and that the industry in question can achieve an profitable internal rate of return; i.e. if electricity is a major overhead (such as in aluminum smelting), it the tariff will be low enough to ensure profit.

This is a significant incentive for heavy industry to invest in South Africa and is supposed to provide significant jobs. However, what it really does is commit Eskom to tariffs for heavy industry at a rate lower (or, at most, on par with the next cheapest supplier of electricity) than anywhere else. It is, in effective, a subsidy for foreign industries, similar to a tax break or import duty waiver.

The most worrying factor about the DEPP is the “built-in” secrecy clause. Eskom is a public enterprise, ultimately owned by the citizenry at large. However, the DEPP guidelines ensure that any contracts signed under the DEPP are to remain secret. This is profoundly anti-democratic. The DEPP states (clause 12.1):

All officials, employees or members of the Department, the adjudication committee, NERSA, Eskom and non Eskom distributors shall regard as confidential all technical information, records, particularly any strategic commercial information and all knowledge that pertains to any project that applied for benefits in terms of DEPP, whether such information is recorded on paper or in an electronic manner.

The very next clause (12.2) in the guidelines bounds individuals with knowledge about the contracts to silence for the rest of their lives.

If the DEPP is a method for promoting growth and development in South Africa, why then the secrecy? Why shouldn’t this be in the public domain? This clause gives foreign corporations like Alcan the right to build electricity-intensive industrial plant in South Africa, get electricity on favourable terms in relation to their expected rate of return, and not to have to tell the country at large what rate they purchased electricity from the South African state. Further, this clause seems at odds with the spirit of the Promotion of Access to Information Act, through a pre-emptive strike against the releasing of information.

The DEPP deal with Alcan means that the citizens of this country won’t know the answers to the following questions:

* What is the price of electricity agreed upon by Alcan and Eskom?
* What are the conditions of supply of electricity?
* Will the price paid to Eskom cover the indirect costs of smelter? For example, the environmental group TWIG has calculated that the indirect costs of harm to the environment based on Eskom CO2 emissions to supply the smelter with electricity would be R6.4 billion.
* Why doesn’t Eskom release its forward cost pricing curve, on a regular basis, as the anticipated costs of new plant escalate?
* Are promised future measures to account for externalised costs of electricity generation compromised by the deal or the DEPP?

Earthlife Africa Jhb calls upon Eskom and Alcan to fully disclose all the details of their deal, including the actual price of electricity.

The fact that Alcan and the Government refuse to disclose these details is especially arrogant in light of the fact that 30% of South Africans are without electricity. Furthermore, the basic lifeline of 50kwh per month per household is entirely inadequate and downright miserly. If the South African Government can offer foreign corporations like Alcan electricity tariffs low enough to ensure profit, then surely it can provide the poorest of its citizens a meaningful allocation of electricity?

Therefore, Earthlife Africa Jhb calls upon Eskom and the Government to increase the basic allocation of electricity to 100kWh per person per month with a step-block tariff.

Interview about Alcan on Canadian radio September 3, 2007

Posted by Andreas in activism, Coega, Environment, News, South Africa.
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Tristen Taylor, Energy Policy Officer for Earthlife Africa and a fellow blogger,was interviewed about the Alcan aluminium smelter planned for Coega on the Canadian radio station CKUT Montreal the other day. Alcan (recently bought by giant mining transnational Rio Tinto) is a Canadian company, hence the interest, I guess.

I think this is a really great interview. It explains some of the main concerns about the proposed smelter and examines various related issues. Very much worth a listen – in fact this kind of thing should be on public radio in SA.

You can download it here.

Eskom Begins to Crack over Alcan’s Secret Deal May 18, 2007

Posted by Andreas in activism, Coega, Environment, News, Press Release, South Africa, Sustainable Living.
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OK, I admit it, I’ve blatantly copied this from Tristen’s blog, but hey, it’s a press release after all, so let’s spread the news.

Press Release: Eskom Begins to Crack over Alcan’s Secret Deal
Earthlife Africa Jhb
16th of May 2007

After weeks of legal pressure and citizens’ protests, Eskom has partially relented and disclosed more details about its deal with Alcan over the long-term selling of electricity. While Eskom’s disclosure is not sufficient for an adequate accounting of the deal with Alcan (and the undisclosed subsidies of that deal), it represents a step in the right direction.

In its response to an internal PAIA appeal from Earthlife Africa Jhb, Eskom noted the following:

1) Alcan will not have the right to sell on electricity
2) Alcan will be subject to a “take-or-pay” arrangement
3) There will be no linkages between the aluminium price and the price that Alcan will pay for electricity.

On the matter of price, Eskom is still refusing to disclose the actual price (cents per kilowatt hour), citing that it would violate confidentiality agreements with Alcan. It seems that Eskom would rather talk to a Canadian multinational corporation than with the South African people.

What Eskom has stated, in regards to the price of electricity, is that the price will be no lower than the cost of supply (as far as possible, according to Eskom), not be subsidised by other users, and linked to Eskom’s Forward Pricing Curve. All of this information is not exactly helpful.

Eskom’s costs of supply (and “at the gate cost”) and forward pricing curve are something of a mystery. While interesting to note that the price of electricity is linked to the forward pricing curve, that it essentially meaningless without detailed knowledge of the forward pricing curve. Likewise, what is Eskom’s current cost of supply, and what is meant by the notion that Eskom will not charge below the cost of supply as far as possible?

According to a confidential document from Eskom (Confidential Briefing Note: New Build Programme: Revised Capital Expenditure for the Period 2007/8 to 2011/12), a new coal-fired power station will have at supply cost of 25c/kwh. Is this future cost the basis of cost of supply or would it be from the much cheaper current cost of supply?

Further, the issue of subsidisation is also unclear, given the massive R150 billion capitalisation period over the next five years. In order to finance this, R100 billion will be raised through debt. Eskom will have to borrow heavily, and the question is, will Alcan, as one of the largest, single users of electricity in the country, pay towards that debt? That question can only be answered by the disclosure of the actual price.

Already the Coega IDZ has had a variety of subsidies thrown at it, to the tune of R7.5 billion. In addition, Eskom is spending R6 billion on transmission lines to Coega (to service Alcan’s smelter). Will Alcan pay a part of those costs, especially cost of the transmission lines? It is highly doubtful that Alcan will pay back Eskom (via a high cost of electricity) for the transmission lines; somebody else may have to that, namely consumers and taxpayers. Effectively, this is a handout to the very wealthy.

The issue of subsidisation runs even deeper when the externalised costs of electricity are taken into account. Coal-fired power stations produce local and global pollution. The SOx and NOx emissions from these stations cause damage to people’s health, agriculture and nature. Dealing with these negative effects (acid rain and respiratory problems), costs money in health care costs and losses to business. Globally, the CO2 emissions from coal-fired power stations are a major contributor to global warming, which is set to cause extreme drought, famine and migration throughout sub-Saharan Africa. These externalised costs of coal-fired power stations have been estimated to be at least twice the current cost of electricity. Will Alcan be contributing towards these externalised costs or will it be the South African taxpayer? That can only be determined through the disclosure of the actual price.

Earthlife Africa Jhb calls upon Eskom and Alcan to fully disclose all the details of their deal, including the actual price of electricity. Confidentiality clauses can easily be dealt with if both parties decide to reveal the information and become the kind of honest and accountable public institutions and private investors that our country requires.

Important Update on Alcan Protests on 9th of May 2007 May 9, 2007

Posted by Andreas in "The Economy", Coega, Environment, News, South Africa.
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Just found this updated press release on today’s Alcan protest here. If your planning to take part in the activities, please note the changes.

Press Release: Important Update on Alcan Protests on 9th of May 2007
Earthlife Africa Jhb
8th of May 2007

The National Day of Action against Alcan has had to alter the schedule of its protests in Port Elizabeth. Demonstrations outside of the Coega Development Corporation will start at 10:00am, not at 11:30am as previously stated. The organisers apologise for any inconvenience this may incur.

In related news, the Richards Bay protest has had to be cancelled for unforeseen circumstances. This will be rescheduled for a later date.

The Johannesburg protest will go ahead as planned, starting at 2:30pm.

Revised Details of protests on the 9th of May 2007:

Johannesburg: 2:30pm to 4:30pm
Place: Alcan National Office
Fredman Towers
13 Fredman Drive
Sandton

Port Elizabeth: 10:00am to 11:30am
Place: Coega Development Corporation
Libra Chambers
Cnr Oakworth Road & Carnarvon Place
Humerail

National Day of Action Against Alcan May 7, 2007

Posted by Andreas in "The Economy", Coega, Environment, News, South Africa, Sustainable Living.
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Here’s a press release from Earthlife Africa Johannesburg. If you are concerned about our environment, about South Africa’s energy future and about what’s going on at Coega, I suggest you should read it and support the day of action.

National Day of Action Against Alcan

On Wednesday the 9th of May 2007, social and environmental justice activists will demonstrate in Port Elizabeth, Johannesburg and Richards Bay against Alcan and its secret deal with Eskom. In Johannesburg, Earthlife Africa Jhb (ELA Jhb) will coordinate a protest outside Alcan’s head office. NiMBLE and other local groups will de demonstrating outside the Coega Development Corporation (CDC) in Port Elizabeth. In Richards Bay, Groundwork will be at Alcan’s local office. See below for addresses and times.

Culminating in 2006, Alcan was engaged in a lengthy negotiation with Eskom regarding the building of an aluminium smelter at Coega (in the Nelson Mandela Metropolitan area, outside of Port Elizabeth). The subject of this negotiation was the long-term purchasing of electricity from Eskom. Aluminium smelters are such intense energy users that plant location is determined by the price at which electricity is made available, rather than location of raw materials.

At the end of 2006, Alcan signed a series of deals with Eskom, the CDC, and Department of Trade and Industry. To date, none of these parties have answered detailed questions about their deals. In particular, the lack of disclosure regarding the price and possible resale of electricity is highly problematic, given Alcan’s history of buying subsidised electricity from governments and selling it back to the same governments at a profit.  

The Coega aluminium smelter will require around at least 1300MW of generation capacity and employ at most a thousand people (enough to power a city; currently, Eskom cannot ensure provisioned of a similar amount of power to the people of Cape Town). The power for the smelter will be heavily subsided (with tax-payer money) through the externalised costs of electricity generation, borne by society as a whole. This subsidy will be in addition to the R1.93 billion in tax-incentives already showered upon Coega. A reasonable estimate of the price of electricity granted to Alcan is around 15% of the price charged to Soweto residents (or about 5 cents per kilowatt hour). This would be substantively lower than the industry and residential average rates (16c and 29c per kwh respectively). This deal covers the next 25 years.

In response to civil society requests (Promotion of Access to Information Act applications) for information on the deal between it and Eskom, Alcan exploited loopholes in South African law, claiming that it would violate its trade, financial, and/or commercial interests. ELA Jhb first requested the Department of Public Enterprises to hold public consultation on the parameters of the deal early in 2005. The department and the Coega Development Corporation have refused to disclose information about their agreements. This ominous wall of silence on a long-term commitment with far-reaching impacts, from a supposedly transparent and accountable government, is reminiscent of Apartheid deals with foreign corporations.

Tristen Taylor, the Energy Policy Officer at Earthlife Africa Jhb, states, “The sale of electricity to Alcan is the sale of publicly produced assets. Given Eskom’s current inability to deliver enough electricity to business and citizens and the fact that 30% of the population is still without access to electricity, a 25-year firesale to Alcan hardly seems appropriate. If we were getting a good deal out of Alcan, why would they refuse to disclose it?”

Earthlife Africa Johannesburg demands that:

1) Alcan discloses details of its contract with the state-owned electricity company, Eskom, including prices, linkages to commodity prices, reselling of electricity provisions, and guarantees of supply.

2) Eskom and Alcan support transparent and accountable governance of state-owned enterprises and incentives to global capital.

3) Government implements its 1998 policy commitment to incorporate externalised costs in electricity prices (along with a commitment to provide free and adequate basic energy services to the poor).

4) All government departments disclose their agreements with Alcan and the CDC and urgently conduct and publish a comprehensive review of incentives, concessions and any other forms of subsidy to energy-intensive industries.

The list of questions put to Alcan, Eskom and government departments is available on request, as are background-briefing papers on the subject.

Details of protests on the 9th of May 2007:

Johannesburg: 2:30pm to 4:30pm

Place: Alcan National Office

Fredman Towers
13 Fredman Drive
Sandton

Port Elizabeth: 11:30am to 1:30pm

Place: Coega Development Corporation

Libra Chambers
Cnr Oakworth Road & Carnarvon Place
Humerail

Richards Bay: time to be determined

Place: Alcan’s Regional Office

4 Chloorking
Alton – Richards Bay

 

 

For more information, please contact:

 

Tristen Taylor

Energy Policy Officer

Earthlife Africa-Johannesburg Branch

Tel: +27 11 339 3662

Fax: +27 11 339 3270

Cell: +27 84 250 2434

Email: tristen@earthlife.org.za

www.earthlife.org.za

A new oil refinery for the Eastern Cape? March 16, 2007

Posted by Andreas in "The Economy", Coega, Environment, News, South Africa, Sustainable Living.
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If negotiations and pre-feasibility studies are successful, Coega, my favourite industrial development zone (not!), may soon be home to yet another multi-billion rand development. This time it’s a new oil refinery.

I guess we’re supposed to think that since they’re already building an aluminium smelter and a ferro-manganese smelter in the area, a little oil refinery won’t make much of a difference.

GroundWork, the KZN-based NGO, has done some really good work on the impact of oil refineries on people and the environment, especially in Durban. You can find their informative fact sheet on the subject here and download a great 22-page pdf booklet here. Actually, if you send me your postal address, I’ll mail you one of the booklets for free.

Speaking about Coega, the floating trophy for light comic relief goes to Mr Anthony Hunneyball from Walmer in Port Elizabeth. In a letter to The Herald (March 8, 2007), Mr Hunneyball writes:

Driving back from Grahamstown to Port Elizabeth I was amazed to see the extent of street lighting in the vicinity of the Coega interchange. […]

This in the light (no pun intended) of global warming and excessive carbon emissions on the one hand, and the constant strain that Eskom is under to supply even normal electricity levels to our cities at present. […]

Don’t get me wrong, I fully support Mr Hunneyball’s sentiments, they just seem a little ironic in the light (no pun intended) of the massively increased carbon emissions and strain on electricity production that will ensue once those metal smelters are fired up.

Helter skelter Coega ferro-manganese smelter February 9, 2007

Posted by Andreas in "The Economy", Coega, rant, South Africa.
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Oh joy of joys, my favourite industrial development zone, Coega (near Port Elizabeth) has secured yet another major investor.

Earlier this year I bemoaned the impact that the recently announced Alcan aluminium smelter at Coega will have. Now it’s a ferro-manganese smelter. Sorry, let me rephrase that, it’s a multi-billion rand ferro-manganese smelter!

Plans are to build

[…] a 1,5-million ton per annum manganese mine and sinter plant in the Kuruman area of the Northern Cape […] and a ferro-manganese alloy production facility in Coega.

Also,

[t]his project will almost certainly mean a speedy upgrade of the railway link between Coega and the Northern Cape.

Sounds great, hey!? Jobs, investment, infra-structure and “a women-led broad-based black empowerment company” (Kalahari Resources).

Take a closer look and things don’t look quite so rosy. For one, it turns out that occupational manganese exposure can be quite nasty:

Chronic exposure to manganese can result in symptoms similar to Parkinson’s Disease, a serious and progressive impairment or deterioration of nerve cells in the brain. Common characteristics of manganism, the chronic exposure to high levels of manganese, can include:

  • Slow movements
  • Weakness
  • Fatigue
  • Tremors
  • Leg cramps
  • Poor balance
  • Rigidity
  • Walking problems

And it’s not even like we have no experience with these sorts of health risks in South Africa. On Wednesday, Tony Carnie reported in The Mercury that

[t]he labour department is investigating the death of a foreman and about 20 suspected cases of manganese metal poisoning among factory workers in Cato Ridge, north of Durban.

The investigation follows the death of 49-year-old father of three Freddy Wright, and the discovery of least five cases of a highly debilitating brain and nerve system illness among staff at the Assmang ferromanganese smelter.

[…]

Occupational health and injury attorney Richard Spoor believes the manganese poisoning cases discovered so far may be the tip of an iceberg of illnesses […]

Great, lets have more of that. I did mention the jobs and the multi-billion rand investment, didn’t I.

[Why do the media report on related issues as though there is no connection? Here’s another recent example.]

When I look at Coega (and Richards Bay and Saldanha Bay and Mozal…), what I see are coastal draining points connected to the inland via sophisticated infra-structure from which valuable resources are extracted and injected into the world-wide corporate matrix.

From the land to the multi-national companies. From “the people” to the multi-millionaire “entrepreneurs”.

It’s called globalisation. It used to be called colonialism.

Aluminium smelter in the Eastern Cape January 16, 2007

Posted by Andreas in "The Economy", Coega, Environment, South Africa.
31 comments

At the end of last year, the Canadian-based multinational aluminium company Alcan announced that it would start construction of a R19.5 billion aluminium smelter at the Coega International Development Zone (IDZ) outside Port Elizabeth in the Eastern Cape in 2008.

The factory, the fourth aluminium smelter in the region (after Bayside and Hillside, both in Richardsbay, and Mozal in Mozambique), will occupy a total of 120 hectares of land, produce 720 000 tonnes of aluminium per year and create some 1000 direct jobs and 200-300 subcontractors’ jobs once operational.

Reactions in the corporate press and from business were predictably favourable, lauding the “unprecedented” economic growth that the smelter will trigger in the impoverished Eastern Cape.

This is all good news, right!? Well, on coming across the initial reports I was sceptical and decided to look at the issues a little more closely…

For starters, Coega is an Industrial Development Zone (IDZ). In essence what that means is that it is a newly created industrial and commercial area which the South African government established to attract foreign investors by bending over backwards in all sorts of ways.

According to the official website, the benefits of investing at Coega include:

  • competitive skilled labour costs,
  • over 90 [government] grants and incentives,
  • purpose-built, world-class infrastructure,
  • integration with South Africa’s newest deep-water port [called Ngqura] ,
  • future plans for an international airport, and
  • among world’s cheapest electric power.

It turns out that converting bauxite (aluminium ore) into aluminium metal is the most energy-intensive industrial process in the world, that aluminium producers use more electricity than any other industry and are significant contributors to global warming and environmental pollution and degradation. (I plagiarised most of the information on this topic from an excellent booklet called Foiling the Aluminium Industry, produced by the International Rivers Network).

Aluminium metal is produced in three stages, all of which have serious negative environmental and social impacts. First bauxite ore is mined, which is then refined into aluminium oxide or alumina, which is itself smelted to produce ingots of aluminium metal.

Three giant companies (Alcoa, Alcan and Rusal) produce more than one-third of the world’s aluminium. There has been a trend in recent years for aluminium processing plants and particularly smelters to move from the traditional industrial centres of the US, Europe and Japan to countries in the developing world where electricity prices are cheap and workers are paid low salaries. The establishment of the smelter at Coega certainly has to be seen within this broader context.

Since the plant at Coega will be a smelter, I will focus on the potential impact of that part of the three-stage process and ignore bauxite mining and refining here. The main concerns about aluminium smelters are as follows:

  • Enormous energy consumption. Nearly all of the electricity consumed in the aluminium production chain is in the smelting process (estimated global average: 15.2-15.7 MWh per ton). In Mozambique, less than 10% of the population has access to electricity while the Mozal smelter devours four times the amount of electricity consumed by all other uses in the country. Escom recently signed an agreement with Alcan to supply the Coega smelter with electricity for 25 years.
  • Pollution and environmental destruction. Aluminium smelting results in polluting gaseous emissions (including hydrogen fluoride, alumina, carbon monoxide, volatile organics and sulfur dioxide) and solid wastes (particulate fluorides and particularly significant volumes of toxic spent smelting pot linings contaminated with fluorides and cyanide). In Canada, toxic run-off from aluminium smelters has been blamed for exceedingly high rates of cancer among beluga whales in the St. Lawrence River. Aluminium smelting emits significant amounts of green-house gases, including CO2 (principally from burning of fossil fuels during electricity generation), methane and perfluorocarbons (very long-lived atmospheric pollutants that are several thousand times more potent greenhouse gases than CO2).
  • Health risks. Workers at aluminium smelters are subject to the effects of fluoride poisoning with symptoms including osteosclerosis, sinus trouble, perforation of the nasal septum, chest pains, thyroid disorders, anemia, dizziness, weakness, respiratory disorders, nausea and increased susceptibility to various cancers.

Looking at all of these potential impacts, the prospect of an aluminium smelter in Coega is certainly much less attractive than the powers that be would have us believe.

Personally, I think it’s a downright disaster on a number of levels, but unless there is massive popular dissent, the promise of multi-million rand profits will no doubt outweigh the health of workers and the environment in the cost-benefit-analysis of those in power.