Minerals Council: Help, Eskom is downscaling the mining industry

The Minerals Council of South Africa has demanded "urgent action" by Mineral Resources and Energy Minister Gwede Mantashe following the implementation of stage 6 load shedding, saying Eskom has essentially made "an industrial policy decision" to downscale the mining industry.

Calling the situation "desperate", the Minerals Council - which represents 90% of mining companies in the country - said it welcomed the Department of Mineral Resources and Energy's statement that it is committed to the development of adequate generation capacity to meet electricity demand.

"However, the industry believes that further actions are urgently needed," the Council said in a statement issued on Thursday.

On Tuesday, in the wake of the implementation of stage 6 load shedding, the department released a short statement saying it would be introducing "immediate measures" to increase access to energy supply. This included the promised promulgation of section 34 determinations, Fin24 previously reported.

These determinations refer to an aspect of energy law that allows for the minister of energy – in consultation with the national electricity regulator – to determine whether new generation capacity is needed, whether the private sector should be involved, and who should be allowed to purchase the electricity.

The implementation of stage 6 load shedding on Monday resulted in many of South Africa's underground mines suspending operations for at least a day, the Minerals Council noted, adding that other sectors were impacted as well.

"Government should stop placing all its eggs in one basket called Eskom," said Minerals Council CEO Roger Baxter.

"Stage 6 load shedding basically meant that mines were confined to 'essential demand' only and this prevented the night and morning shifts from accessing operations. Stage 4 load shedding requires a 20% demand curtailment.

"The real impact is that some companies would have lost a week's production, as crews would have to go back in and first stabilise areas from a safety point of view before mining can resume," the Council's statement added.  

Baxter said the impact of stage 4 and 6 load shedding was "devastating" to the mining sector, as the loss of production would affect the viability of many mines.

"Eskom is essentially making an industrial policy decision to downscale the mining sector when they make these stage 4 and stage 6 calls," he said.

The Council called for Mantashe and other ministers to "make possible and drastically streamline" regulatory processes that would enable fast establishment of self-generation facilities that could supplement Eskom's energy supply, and "urgently" pave the way for future generation by independent power producers.

"While we are particularly encouraged by the Minister’s decision to promulgate Section 34 determinations, we urge urgent implementation," the Council said.

It also called for municipalities and large power consumers to be able to procure power directly from IPPs.

Additionally, the Council wants the licence requirement for self-generation lifted regardless of plant size. Unregulated generation is currently limited to 1MW plants.

The City of Cape Town has written to Mantashe asking that it and other municipalities be permitted to buy electricity directly from independent power producers, avoiding a pending court case. It earlier lodged an application with the Pretoria High Court to allow it and other municipalities to purchase electricity directly from IPPs.

* Additional reporting by Lameez Omarjee

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