Mining houses want to go it alone

Load-shedding a blow to production as R100m could be lost in one shift

Mines can build and source their own power at a cost equal to Eskom ... This would have a catastrophic impact on its ability to repay its debt

In a heavy blow last week, Eskom pushed the button on stage 6 load-shedding, halting operations at SA mines, which spurred the sector to push for reforms enabling it to bypass Eskom.

Johan Theron, group executive for corporate affairs at Impala Platinum, which applied a day’s stoppage to its operations at its Rustenburg and Marula mines, said R100m in revenue could be lost for every production shift lost at its Rustenburg mine.

Harmony Gold lost two shifts this week, said senior investor relations co-ordinator Max Manoeli, which would have an impact on the 85kg to 87kg of gold the company extracts every day.

James Wellsted, senior vicepresident for investor relations at Sibanye, said it was difficult to reduce power demand without affecting production.

Anglo American SA operations were also affected, but it did not provide details.

Henk Langenhoven, chief economist at the Minerals Council SA, said the industry needed more control over electricity availability and tariffs. The blackouts are a threat to a sector that contributes R350bn to the economy every year, he said.

“Production is not doing well, and it is using the same amount of electricity as in 2008. We have become much more efficient — that’s one of Eskom’s problems, we’re using less electricity per unit of production, but there are many of these almost circumstantial issues around us that determine whether we can flourish or not,” he said.

On Friday the department of mineral resources & energy published a request for information for ways to quickly close a power supply gap, saying it wanted to assess options for procuring 2,000MW to 3,000MW of new capacity, the department said.

Minerals Council CEO Roger Baxter said stage 4 and 6 loadshedding was affecting the viability of many mines.

“Eskom is essentially making an industrial policy decision to downscale the mining sector when it makes these stage 4 and stage 6 calls,” he said.

He said the situation was desperate and demanded urgent action by mineral resources & energy minister Gwede Mantashe and other government leaders to “drastically streamline” processes to allow for the rapid establishment of self-generation facilities. Though there have been moves by the government to potentially enable municipalities and large power consumers to buy power directly from independent power producers without going through Eskom, there are still many hurdles, he said.

“What is required is a streamlined process through a onestop-shop made up of the relevant directors-general to enable the urgently required additional power supply to come online in the shortest possible time.”

The Minerals Council says about 870MW of solar power and 800MW of conventional power could be added to the national grid by mining companies over the next three to four years.

Last year Harmony applied to the National Energy Regulator of SA for a 30MW solar energy plant but it is still awaiting feedback from the regulator and Eskom, Manoeli said.

Wellsted said Sibanye had a 350MW module it planned to build near its Driefontein operations. “But the problem is the various issues with the Integrated Resource Plan and approvals,” he said. “In theory, the mines can build and source power independently at an equivalent cost to Eskom. However, legislation prevents this, which is understandable as taking the big-paying customers away from Eskom will have a catastrophic impact on its revenue stream and ability to repay debt.”

Langenhoven said if the industry is able to replace Eskom’s “old and ageing and failing units” with other, cheaper power sources, it will significantly reduce costs for the industry and position it for further investment.