Escalating power costs a major challenge to mining industry

Electricity supply remains one
of the major challenges facing
the mining industry – not just in
South Africa, but also in Africa.
“Most of sub Saharan Africa cannot
guarantee adequate electricity supply
to the mining industry,” says Frost
& Sullivan mining analyst Wonder
Nyanjowa.
Electricity remains an important
input for all forms of mining. A major
energy source for the transport of
personnel, material and ore, as well as
for production machines and mineral
processing. Load shedding and blackouts
continue to have a negative effect
on the industry across the continent.
According to the South African
Chamber of Mines, Eskom and the
mining industry in South Africa
specifically have developed a thorough
understanding of each other’s needs and
concerns that resulted in several formal
agreements, negotiated through the
Chamber. But with electricity increases
continuing, the Chamber has in recent
months become outspoken in its
criticism of the power utility, warning
that further electricity increases could
have dire results.
“It is imperative that the South
African mining industry has access
to an effective and reliable electricity
supply,” said Chamber of Mines CEO
Zoli Diliza shortly after the Chamber
called for a new electricity dispensation
for the country in November 2009,
preferring to now work directly with
the government and bypass the power
parastatal.
Experts have agreed that Eskom’s
proposed tariff increases of some 35%
per year for the next three years, revised
from the initial 45% request to the
National Electricity Regulator of South
Africa (Nersa), remain extremely high.
“The challenge for the mining sector
is that we have a basket of goods
and services whose costs are rising at
double digit figures in an environment
of low commodity prices. This means
that a number of mining companies are
battling for survival and extra costs add
to the burden of the pressures they face
in the short term,” said the Chamber.