The main power utility PPC will hold an extraordinary shareholders meeting today to approve a new electricity supply tariff for the troubled state-controlled general mining and nickel producer Larco, the country’s second-biggest electricity consumer. However, the revision will not release the producer from its loss-incurring situation and the involvement of a private-sector investor appears to the only viable solution for Larco’s survival.
According to announcements made yesterday, Larco’s revised tariff level, following profile-based discounts, will be set at 37 euros per MWh. Factoring in demand response mechanism benefits, the price should fall to around 35 euros per MWh.
This mechanism enables major industrial enterprises to benefit from electricity cost savings in exchange for shifting energy usage to off-peak hours whenever required by the operator.
Though PPC’s revised tariff level promises to reduce the nickel producer’s production costs by 1,500 euro per metric ton of production, it keeps Larco in a loss-incurring position. The cost of nickel is currently priced below 10,000 dollars per per metric ton, while the industrial enterprise’s cost of production exceeds 15,000 dollars per metric ton.
During tariff-level negotiations with PPC, Larco officials presented a specific business plan that also included other cost reductions that would bring the industrial enterprise’s overall production costs to 12,000 dollars per metric ton.
This business plan is intended to draw a private-sector investor who will proceed with required investments that could transform the nickel producer into a sustainable industrial enterprise.