In-house renewable energy could be a boon for SA mines

21st February 2020

By: Tasneem Bulbulia

Senior Contributing Editor Online

     

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With their recent profitability buoyed by price improvements in certain commodities, some South African miners may consider investing part of their windfall gains to create their own renewable-energy-generating capacity, and, according to consultancy SRK Consulting director and principal consultant Andrew van Zyl, there is no better time to consider such opportunities.

Encouraging comments by Mineral Resources and Energy Minister Gwede Mantashe at the Investing in African Mining Indaba, in Cape Town, this month, have the industry abuzz with possibilities for self-generation of electricity.

“While Eskom’s baseload supply is still vital to keep mines running, independent power generation from renewable sources holds value for a few reasons. These relate to issues of rising prices of electricity from the grid, as well as to mines’ environmental commitments and future carbon tax liabilities,” says Van Zyl.

He notes that positive movements in some commodity prices may give mining companies a bit more leeway to consider capital investments in renewable-power projects.

“The mining sector continues to struggle with costs rising faster than productivity – and the administered price of electricity from Eskom has clearly been an important and unavoidable contributor to this headache,” he says.

“As renewable-energy technology has lowered the cost of solar and wind energy, for instance, private producers now have the opportunity to peg a portion of their future energy costs. Being partially off-grid will also make mining companies less vulnerable to the full impact of load-shedding, which is very disruptive to continuous operations, as found in the mining industry.”

He also highlights the mining industry’s commitment to a greener future and to lowering the carbon footprint of mining operations.

Many mining groups have adopted global best practice standards and protocols to achieve this goal, but government’s application of a carbon tax will soon have a more direct impact on the industry’s bottom line.

“It, therefore, makes sense for mines to be considering alternative sources of energy to augment coal-fired power. While contributing to their environmental goals, it could also potentially reduce their carbon tax exposure.”

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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