South Africa’s Chamber of Mines, noting national electricity costs have tripled since 2008, seeks new pricing from the National Energy Regulator of South Africa (NERSA) in response to Eskom’s most application for electricity price increases through 2018.
The Chamber, representing more than 90% of South Africa’s production value, says the country’s mining industry in highly dependent on competitively supplied electricity to extract and use resources. Overall, a lack of electricity has contributed to poor economic growth since 2008, according to Chamber President Mark Cutifani, in turn, exacerbating South Africa’s budget deficit and increasing unemployment.
In platinum and gold mining alone, he added, electricity costs are reaching a “tipping point” after increasing by $784 million from 2012 since 2007. “Doubling in the price by 2017 is simply unaffordable and will prejudice the platinum and gold mining sectors,” said Cutifani.
Base metals, mining and quarrying and non-metallic minerals are the most electricity intensive sectors of the economy per unit of GDP created. The government, added Cutifani, needs to include competitiveness and efficiency objectives in its Eskom agreement.
The mining sector helped generate 18.7% of the country’s 2010 GDP. Almost one fifth of South Africa’s economy is linked to mining. Directly, the industry’s contribution was 9.2%, creating nearly 1.4 million jobs—over 500,000 jobs directly. Another 850,000 jobs were created in either supply goods or services industries, or mining products for downstream value addition.