Mining Indaba: ‘Load shedding cost the economy about R1 billion a day’ – Mantashe

The Minister of Mineral Resources and Energy, Gwede Mantashe, said load shedding has cost the country an estimated R1 billion a day and led to a decline in mineral production.

Mantashe delivered the opening address of the 2023 Investing in African Mining Indaba held at the Cape Town International Convention Centre (CTICC) on Monday.

Mining Indaba

The Mining Indaba takes place from 6 to 9 February 2023, under the theme Unlocking African Mining Investment: Stability, Security, and Supply.

It brings together global leaders, captains of the industry, and investors to engage on the future of mining and explore ways to attract investments in African mining.

Power interruptions

Mantashe said South Africa experienced more power supply disruptions in 2022.

“This led to a decline in mineral production across all commodities. It is estimated that load shedding costed the economy about R1 billion a day. In November 2022, mining production contracted by 09% marking a 10th consecutive month of contraction in volumes produced.”

However, the minister said South African mining company Gold Fields’ production increased by 10% during the same period.

“It is our considered view that Gold Fields’ performance was in part because of the reforms on embedded generation which they took advantage of following the amendments to Schedule 2 of the Electricity Regulation Act (ERA) wherein the licensing requirement for generation projects for own use was increased from 1 megawatt to 100 megawatts, and ultimately removed altogether.”

“This cushioned them from the impact of load shedding as they were able to generate their own energy, and thus increased and maintained production,” Mantashe said.

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Eskom must improve

Mantashe said at the centre of the country’s current energy challenges is the decline in the Energy Availability Factor (EAF) from an estimated 75% to 49%.

“The most feasible and logical option to exercise to resolve load shedding is by arresting the decline in the EAF. Failure to attend to and address the declining Eskom plant performance and subsequent higher stages of load shedding is an irritation to society and has the potential of pitting society against government.”

Mantashe said the immediate focus to resolving load shedding must be on improving EAF through a focused, funded and planned maintenance of existing power stations.

“Procurement of emergency or short-term power from existing facilities and other private power plants, purchase of additional electricity from neighbouring countries which can be unblocked in the short to medium term and improving skills capacity at Eskom.”

Global energy prices

Mantashe added that the soaring of global energy prices also negatively impacted the industry’s operational costs.

“For instance, the price of crude oil averaged $100 per barrel in 2022 and as a result mining companies had to pay exorbitant prices for fuel and electricity.”

Logistics

Mantashe added that the mining industry also relies heavily on efficient railways and ports for their export logistics.

“It is, therefore, urgent for the country to normalise freight operations. Hence, Transnet is seized with efforts to accelerate improvement of its rail network to support the return to service of locomotives to enable the export of bulk commodities.”

President Cyril Ramaphosa is expected to deliver the Presidential Keynote Address at the mining Indaba.

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