BHP Billiton Ltd
(ASX:BHP) has signed an amended power supply contract with electricity distributor Eskom Holdings Ltd for the Mozal aluminium smelter in Mozambique.
The companies have announced that they will continue talks relating to the contracts for the supply of electricity to the Hillside and Bayside smelters in South Africa over the coming months with the intention of concluding binding agreements before the end of the financial year.
The contracts are partly based on the price of aluminium and currency rates.
A new accord may involve BHP taking responsibility for the commodity pricing and currency exchange risks related to the contracts, which would reduce the volatility of Eskom’s earnings and improve its balance sheet.
BHP’s smelters in South Africa and Mozambique use as much as 2,150 megawatts of power, equal to over 5% of installed capacity operated by Eskom, which supplies almost all of South Africa’s electricity.
Eskom is also believed to be in talks with Anglo American Plc over a deal.
BHP Billiton posted a profit of $7.243 billion for fiscal 2009.
