South Africa’s power crisis puts mining sector at risk

South Africa’s dire power situation is putting pressure on commercial and industrial players that rely heavily on stable supply.

According to Ted Blom, independent power and mining expert and commentator and a partner at Energy & Mining Advisors: “More than 30 percent of South African mining projects will be terminated prematurely due to additional power costs if suitable solutions are not found within the next 12 months.”

His comments follow Mineral Resource and Energy Minister Gwede Mantashe’s announcement last week at Mining Indaba that the government had conceded that it must allow mining companies to produce energy for their own use.

Ted Blom addressing the media

Ted Blom adds: “Most mining projects in Africa provide their own power for operations, but that just increases the hurdle rate for committed capital to develop and run the project. The big difference is that provision of own power is already factored into those projects whilst South African projects have NEVER factored in the costs of providing own power.”

“The whole South African mining and beneficiation sector was built on the back of cheap and abundant electricity availability. The current environment has changed drastically and most businesses (including miners and smelters) have NOT seen this coming. Only in the past two years has business started waking up to the new reality, but NONE have reviewed their business models to incorporate the new electricity reality.”

The full interview with Ted Blom can be viewedà‚ here.

Load-shedding to continue

A recent report by the Council for Scientific and Industrial Research (CSIR)’s Energy Centre, analysing South Africa’s load-shedding, indicated that it cost the country’s economy between ZAR60bn and ZAR120bn in 2019 alone.

The total economic impact of load-shedding in South Africa could be as high as ZAR338bn over the past 10 years, according to the report titled Setting up for the 2020s: Addressing South Africa’s electricity crisis and getting ready for the next decade. The CSIR warned that load-shedding was expected to continue for the next two to three years as the country will sit with a supply gap until 2022.

12-14 May 2020, CTICC, Cape Town, South Africa

At the upcoming African Utility Week and POWERGEN Africa in Cape Town from 12-14 May, the power and energy challenges in and success stories of the Commercial & Industrial sectors on the continent will be unpacked. Clickà‚ hereà‚ to learn more and register your attendance.

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