- Minister of Minerals and Energy Gwede Mantashe’s positive opening speeches at previous Investing in African Mining Indabas have failed to make any impact on the long-term decline in the sector.
- Latest figures from Stats SA show that in the year to November 2022, South African mining output fell by 9% year on year – and 2022 is shaping up to be the fifth successive year of declining mining output from South Africa.
Mantashe offered the following on the energy sector:
At the center of our current energy challenges is the decline in the Energy Availability Factor (EAF) from an estimated 75% to 49%. Therefore, the most feasible and logical option to exercise to resolve loadshedding is by arresting the decline in the EAF. Failure to attend to and address the declining Eskom plant performance and subsequent higher stages of loadshedding is an irritation to society and has the potential of pitting society against government.
Our considered view is that the immediate focus to resolving loadshedding must be on the following initiatives and actions:
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- 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
- Improving skills capacity at Eskom
Law firm Webber Wentzel’s team of mining experts has again identified a number of aspects that the Minister should identify in his speech and, more importantly, act upon if the sector is to set a new path. The greatest short-term priority is to address the country’s energy shortage.
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‘As the minister is responsible for both the energy and mining portfolios, greater policy and coordination is needed between the two sectors. Whilst the recent and proposed amendments to regulations regarding licensing thresholds are welcomed, Government could further facilitate miners’ ability to procure clean power from independent power producers, and large-scale private energy projects should be designated as Strategic Integrated Projects under the Infrastructure Development Act, which would speed up permitting.
Greater investment is needed in the electricity transmission network, to overcome capacity restraints. The minister should make it possible for mining companies to situate their renewable plants in the most favourable areas, and wheel that power through the grid to their mines.
The Integrated Resource Plan, which only takes South Africa’s power planning to 2030, needs to be updated with climate change in mind and to look beyond 2030, as a matter of urgency. The minister should expedite the passage of the Electricity Regulation Amendment Bill into law. This will separate Eskom transmission from Eskom into a new Transmission System Operator and create a new Central Purchasing Authority. This separated entity will enable funding for transmission and distribution development in South Africa and not be encumbered by Eskom.’ generation’s poor performance.
Link to Mantashe’s full speech HERE
Author: Bryan Groenendaal
Source: Webber Wentzel
