by Gill Moodie (@GrubstreetSA) One cannot overestimate the significance of Sake24’s recent PAIA win in the Bloemfontein Supreme Court of Appeal that forced mining giant BHP Billiton to reveal how much of a power discount it was getting from Eskom for two of its aluminium smelters.
This was a long court battle – almost four years’ long – and the outcome sends out a strong message that if a journalist – or a member of the public – requests information involving the state and a third party, the request cannot simply be refused on the grounds that the third party can expect some measure of privacy.
“The ruling shows that the public’s right to access information can trump commercial secrets,” media attorney Willem de Klerk, who represented Sake24 in the bid, told Grubstreet last week. “It shows that large corporations doing business with state entities may expect their commercial dealings to be placed under the spotlight.
“The judgment emphasises that it is insufficient for such companies to prevent disclosure of their business deals merely by alleging prejudice – but rather that they will be expected to prove that the risk of such prejudice is real and not only perceived. This is a victory for the consumer.”
(Click here to read an analysis of the ruling by De Klerk.)
The protracted court ballet that resulted in this exposé began when Sake24’s mining writer, Jan de Lange, asked for Billiton’s electricity pricing structure for the Hillside and Mozal smelters (among other things) by using the Promotion of Access to Information Act – or “PAIA” in June 2009.
After Billiton and Eskom refused to give the information, De Lange and Sake24’s parent company, Media24, launched an application in 2010 in the High Court.
The court ruled in De Lange and Media24’s favour but Billiton appealed and this appeal was dismissed two weeks ago.
The information meant that De Lange could reveal that a deal that runs till 2028 – and at a time when South Africans are being put under immense pressure by significant Eskom price increases – Billiton’s smelters are paying only 22.65c per kilowatt-hour for electricity while ordinary consumers are paying R1.40.
What a scandal – and what a story!
For De Lange, finally laying his hands on the hard facts of the Billiton deal was hugely rewarding but, he told Grubstreet he was also in a bit of shock.
“It took so long… so it’s a bit like being a dog chasing a car. Now I’ve caught the car, I don’t know what to do with it,” said De Lange, a veteran journalist who worked as a labour reporter before he started covering mining.
But he is being modest as the mere fact that De Lange suspected something was up with Eskom’s deal with Billiton is a tribute to his reporting prowess and long years of covering the mining industry.
De Lange started looking at this deal long before the PAIA application was launched.
There was a measure of secrecy and smugness around the smelters from the mid-1990s, De Lange said. Later as he covered Billiton’s results and then also Eskom, he could tell there was a fishy connection in the figures.
“I compared Eskom (with that of Billiton) and there were always figures mentioned in the results at Billiton that were applicable to Eskom. I always checked if I could cross-reference these numbers.”
De Lange really knew something was up when Eskom’s results in 2009 showed a R9.3-billion loss attributed to embedded derivatives (a derivative that is linked to an external instrument).
“2008 was Billiton’s second-largest operating profit from aluminium – $1.4-billion – and in 2009 Eskom had a loss of R9.3-billion due to embedded derivatives,” said De Lange. “It wasn’t a (direct) connection but I knew these figures were related. I never knew exactly how.”
“At Eskom’s results presentations I always asked for this information. (Eskom CEOs) Brian Dames and Jacob Maroga would say: ‘That’s Jan de Lange’s question’. I always asked for these things and I never got the answers and I knew there was a secret.”
When De Lange started writing about the national shortage of electricity, he realised how important the Billiton deal was in the national scheme of things and so he submitted the PAIA in 2009.
“The numbers that are so shocking now – that they are buying electricity for a fifth of what you and I pay – were leaked to Pieter van Dalen (of the Democratic Alliance) in Parliament (after the PAIA application was submitted). I knew that whatever the contract said, it was way below cost of supply these days.”
De Lange believes these are the only such contracts in existence today and a left-over from economic policy that used electricity to beneficiate South Africa’s base metals and mining minerals.
Thanks to De Lange – and his determination to see this through – the deal is under review as Eskom has now asked the National Energy Regulator South Africa to intervene on the contract.
– SA’s leading media commentator, Gill Moodie, offers intelligence on media – old and new. Reprinted from her site Grubstreet.