Johannesburg, South Africa — 24 April 2013 – An electricity tariff rise of only 1% has a devastating impact on the mining industry as it amounts to an increased expenditure of R100 million a year, according to the South African Chamber of Mines.  

It therefore really hurts that since 1 April this year, large power consumers have had to fork out an average monthly 9.6% tariff increase. Energy challenges facing big business is high on the agenda at this year’s African Utility Week which takes place in Cape Town from 14 to 15 May.
According to Nicolette Pombo-Van Zyl, programme manager of the Large Power User programme at African Utility Week:  “the proverbial axe is falling on ‘business as usual` as every industry in South Africa, from mining to manufacturing to retail, is cringing at the thought of rising energy tariffs and commencement of a carbon tax on 1 January 2015.

Although some industry insiders have warned that the tariff increase could lead to 250 000 job losses, Chamber of Mines techno-economic adviser Dick Kruger is more optimistic.

“Eskom previously indicated a 35% increase.  Although 9.6% is high, we are nonetheless thankful that it is less than the 16% that Eskom eventually applied for.  This increase will definitely not go unnoticed in an industry which has seen prices doubling over the last three years,” he emphasises.  

“However, at this stage we do not foresee any job losses or mine closures directly as a result of the increase.  We have known since August 2012 that increases were on the way and mines could figure this into their short and medium plans.”

Says Dick Kruger:  “some mines have already looked at replacing electric motors with variable speed drive motors and replacing compressed air drills with extremely expensive electric rock drills.” 

According to Kruger, gold mines will be hit hardest:  “about 60% of the total cost of the electricity consumption at gold mines goes towards creating an environment that one can work in.  Large amounts of money are spent on ventilation, pumping and refrigeration. Only 40% of the expense goes towards production purposes,” he explains.

“The mining industry has signed the Voluntary Energy Efficiency Accord committing itself to pursue a reduction in power use of 15% by 2015. Mines have already saved a lot of energy, but savings can only be done up to a certain point before production is compromised,” he points out.

Kruger emphasises the need for more power generating plants:  “When the new Medupi power station in Limpopo and the Kusile station in Mpumalanga have been completed, we will be able to breathe again…… least for a while.”