Rolling blackouts and the high number of power supply disruptions in 2022 are estimated to be costing the economy about R1-billion a day, the Investing in Africa Mining Indaba 2023 heard from Minister of Mineral Resources and Energy, Gwede Mantashe at the opening day.

Mantashe says the epicentre of the current energy challenges is the decline in the Energy Availability Factor (EAF) from an estimated 75% to 49%. He told the 6000-odd delegates that to resolve rolling blackouts, immediate focus should be on:

• 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. Mantashe says Eskom has been approached with offers of additional electricity from Zambia and has secured a future pipeline of 100Mw from “a number of projects in Mozambique”.
• Improving skills capacity at Eskom.

“Ongoing power supply disruptions (rolling blackouts) resulted in logistical bottlenecks on our railways and ports. The soaring of global energy prices negatively impacted the industry’s operational costs. For instance, 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 electricity,” he says, adding that the mining industry relies heavily on efficient railways and ports for export logistics. Mantashe says the logistical bottlenecks on railways and ports continue to contribute to the decline in export volumes of bulk commodities such as coal, iron ore, manganese, and chrome.

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He says Transnet needs to urgently accelerate the improvement of its rail network to support the return to service of locomotives to enable the export of bulk commodities, adding that the establishment of joint structures by Transnet and the Minerals Council South Africa should stabilise and improve South Africa’s operation efficiencies at the ports.

Peter Leon, partner and Africa chair at international law firm, Herbert Smith Freehills says although Mantashe “made all the right noises”, he failed to offer any concrete solutions to the significant challenges facing the mining sector. Leon called for the uncoupling of the departments of minerals and energy, so that a new Minister of Energy can “fast track the changes to ensure that South Africa’s energy sector can receive the urgent attention it deserves”.

Embedded power generation to boost mining production

In November 2022, mining production contracted by 9% marking a 10th consecutive month of contraction in volumes produced. However, Mantashe pointed out that in the same period, Gold Fields increased production by 10%. “Gold Field’s performance was in part (due to) the reforms on embedded generation where the licensing requirement for generation projects for own use was increased from 1 megawatt to 100 megawatts, and ultimately removed altogether. This cushioned them from the impact of rolling blackouts as they were able to generate their own energy, and thus (Gold Fields) increased and maintained production,” Mantashe said rather proudly.

What he left out was the fact that it took years for the mining company to get regulatory approval for the project. The R715-million, 50MW Khanyisa solar plant, which came online in August last year, generates about 24% of what the South Deep mine requires. Gold Fields, vice president, Martin Preece last year noted that the plant was expected to generate R123-million in electricity savings and reduce the mine’s carbon footprint by more than 110,000 tonnes of CO2, “aiding greatly in Gold Fields’ chase to meet its environmental, social and governance targets”.

“A number of mining companies are beginning to follow the Gold Fields example and this kind of innovation will save jobs,” Mantashe told journalists at a press briefing. However, economist Lara Hodes of Investec Bank says she is projecting a further contraction in mining production of around -6.1% year-on-year, as demand continues to be affected by the subdued global environment.

Tried and tested mining cadastre  

In response to questions about the development of a mining cadastre — an online portal that allows the public, free of charge, access to view existing mining rights, exploration permits and related stuff, as well as the known geological features of a mining jurisdiction, Mantashe said procurement would not take place via the media. “We will be using the standard government procurement requirements and we are looking for a system that has already been implemented in other jurisdictions,” he says.  The Department of Mineral Resources and Energy has previously said it was benchmarking similar systems in Botswana and Namibia. BM/DM