South Africa’s power supply disruptions are a major concern for the mining sector, which has seen a decrease in production due to load-shedding.According to Gwede Mantashe, minister of mineral resources and energy, this decline in mineral production was seen across all commodities in 2022, a year he described as “difficult” for the mining sector at large.“It is estimated that load-shedding costs the economy about R1 billion a day. In November 2022, mining production contracted by 0.9%, marking a 10th consecutive month of contraction in volumes produced.”He said the soaring global energy prices further negatively impacted the industry’s operational costs. “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 elec tr icit y.”He said all these factors impacted negatively on mineral sales. “International factors such as the soaring energy prices due to the ongoing geopolitical dynamics, along with the ongoing power supply issues in the country, had a severe impact. Logistical bottlenecks on our railways and ports locally led to further challenges.”But, said Mantashe, it was possible to overcome these challenges. Citing the example of Gold Fields, which increased production by 10% last year, Mantashe emphasised that timeous action could deliver positive results.“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 wherein the licensing requirement for generation projects for own use was increased from one megawatt to 100 megawatts, and ultimately removed altogether,” he said. “This cushioned them from the impact of load-shedding as they were able to generate their energy and thus increased and maintained production.”Mantashe agreed that the current energy challenge was a massive crisis for the mining sector and said at the centre of the challenge was the decline in the Energy Availability Factor (EAF) from an estimated 75% to 49%. “The most feasible and logical option to resolve load-shedding is by arresting the decline in the EAF. Failure to attend 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 the government.”He said his department was of the view that the immediate focus on resolving load-shedding was on improving EAF through a focused, funded and planned maintenance programme of existing power stations. “We also need to procure emergency or short-term power from existing facilities and other private power plants, as well as additional electricity from neighbouring countries, which can be unblocked in the short to medium term."He said addressing the skills capacity at Eskom should also be a priority.In the meantime, said Mantashe, South Africa had renewed its frontier status as an exploration destination, and was calling on investors to consider the country for rare earth minerals.“The country’s exploration landscape is becoming increasingly more fertile for the discovery of world-class deposits of minerals such as rare earth minerals, lithium, copper, and nickel.”
