Mining Weekly reports that Minerals Council’s chief economist Henk Langenhoven last week warned that the higher-than-inflation tariff increases granted to state-owned Eskom by the National Energy Regulator of South Africa (Nersa) will have a major impact on the mining industry’s cost structure.
The increases, which amount to nearly two-thirds of what the power utility had applied for, will jeopardise the viability of marginal and loss-making mines and will, inevitably, accelerate job losses at energy-intensive mines in particular, he asserted.
“The mining industry consumes around 30% of Eskom’s annual power stocks, for both mining and smelting activities. The industry has worked closely with Eskom to allocate its demand to off-peak hours. And, in addition to being a major customer of Eskom, it is a consistent and early payer,” Langenhoven argued, adding that, as a result, the mining industry fundamentally supported the financial wellbeing of Eskom.
He warned that if the mining industry’s electricity use were to decline as tariffs made certain operations and activities unprofitable, Eskom would not achieve its targeted sales volumes. This would inevitably result in additional substantial increases in electricity prices across the country, which would have to be paid by industrial and private consumers alike, Langenhoven lamented.