Johannesburg — PUBLIC Enterprises Minister Alec Erwin has warned BHP Billiton not to "negotiate its contracts with Eskom through the media", but the largest global resources company yesterday quashed suggestions that unreliable power supply may cause it to delay its investment plans in southern Africa.

Earlier this week, the London- and JSE-listed BHP Billiton said "early stage investigations indicate that, right now, there is not the power needed to expand the (Mozambican-based) Mozal smelter and (KwaZulu-Natal) Hillside plant".

BHP Billiton needs an extra 675MW of power to expand Mozal and Hillside to raise aluminium production by 750000 tons a year -- power it cannot yet rely on getting from Eskom.

At a briefing on Tuesday, Erwin issued a warning to BHP Billiton, when he said: "I am sure BHP Billiton know enough not to negotiate their contracts with Eskom through the media".

He said Eskom was able to provide power to the private sector "and that includes BHP Billiton".

Erwin added that SA was one of few countries in the world that accommodated the power needs of aluminium smelter companies, while "other countries just say no".

Aluminium smelters are notoriously power-hungry and, by itself, Mozal already uses four times the average national electricity consumption of the rest of Mozambique. Even though aluminium prices are skirting 18-year highs, the cost and scale of power requirements for smelters has been a headache for aluminium producers worldwide.

BHP Billiton spokeswoman Bronwyn Wilkinson said yesterday that it was not a case of the company walking away from expansion plans in SA.

"But we do understand the situation that Eskom is in and we are not inclined to demand power from Eskom, given the capacity constraint it faces," she said.

Responding to Erwin, Wilkinson said BHP Billiton "does not negotiate its contracts through the media, and in fact we have an excellent relationship with Eskom".

Eskom also denied any rift between the two organisations.

Eskom spokesman Fani Zulu said that the power parastatal was negotiating with BHP Billiton, "and we have given the company the assurance that if it is looking at investing further in SA, we will be in a position to meet its needs".

Zulu also said that, notwithstanding recent "technical problems that compromised the quality of the supply", especially in Western Cape, Eskom could meet the needs of all foreign investors.

"For foreign investment purposes, Eskom is in a position to provide a reliable power supply at world competitive prices. We are one of the cheapest when it comes to electricity supply for industrial use," he said.

He said negotiations were taking place with companies such as BHP Billiton and Canadian firm Alcan, which is looking to build an aluminium smelter at the Coega Industrial Development Zone.