Roger Baxter. Picture: RUSSELL ROBERTS
Roger Baxter. Picture: RUSSELL ROBERTS

The South African mining industry has 1.67 gigawatts of projects waiting for government permission to build as Eskom struggles to keep the country supplied with electricity.

Eskom made an unprecedented cut of 6,000MW, or six gigawatts of power, on Monday evening, ramping up from the four gigawatts it had cut from the system. It prompted SA's underground mines to hoist employees to surface and prevent the night and early morning shifts from going to work.

The cuts, reminiscent of the disrupted electricity supply in early 2008 that shut mines, underlined the fact that many mining companies have had applications lodged with the government for years for permission to build their own electricity generating plants or strike a deal with independent power producers to supply dedicated, cheap and reliable power to mining and processing operations.

Miners are calling on government to step up plans to grant them permission to set up independent power sources. Business Day TV caught up with James Wellsted from Sibanye-Stillwater to discuss the situation in more detail.

Mineral resources & energy minister Gwede Mantashe has recently taken over the energy portfolio and is coming under increasing pressure from heavy industry and other electricity consumers to speed up the granting of licences and permissions to independent power suppliers.

"The situation is desperate, and demands urgent action by Minister Mantashe and leaders of other government departments to make possible and drastically streamline regulatory processes to enable the rapid establishment of self-generation facilities to supplement Eskom’s constrained capacity, and also urgently open the way for further generation by independent power producers," said Minerals Council CEO Roger Baxter.

According to Baxter, the mining industry could bring into production 869MW of solar power and up to 800MW of conventional power over the next three to four years.

This is higher than the 609MW Business Day was told on Wednesday.

Major listed companies such as Sibanye-Stillwater, Anglo American Platinum, Harmony Gold, Gold Fields and newcomer Orion Minerals all want to fund solar projects for their operations.

While solar and other renewable power sources will not be used for base load power needed to safely run mining operations, the power can be used for surface processing plants and other functions. Eskom will still be used for base load electricity, but at a reduced level.

For Eskom, any reduction of consumption by large users and conscientious payers would have severe repercussions. The state-owned monopoly, which has lurched from crisis to crisis over the past decade, has R450bn of debt.

Eskom has raised tariffs by 523% since 2006 for its mining clients, leaving the industry reeling. Marginal gold mines have shut and thousands of jobs have been lost.

Mantashe has said in a statement after the cutting of six gigawatts of power that he would promulgate section 34 determinations, which under the Energy Regulation Act facilitate the direct procurement of electricity capacity by municipalities and large industrial users from independent power producers.

This would mean Eskom could be bypassed.

Baxter also urged the government to free up the unregulated generation limits set under the act, which currently stand at 1MW and which the state has said will be lifted to 10MW.

"Power produced by mining companies for their own use often does not require Eskom handling or transmission and if so, should not be subject to licensing, irrespective of size," Baxter said.

"The current regulatory requirements to license self-generation for own use are cumbersome, and very time consuming," he said.

To secure a licence needs securing environmental and land use permits, a Nersa generation licence, Eskom permission if using the the monopoly's transmission lines, and approvals under the integrated resources plan 2019, which sets limits for the amount of renewable power SA can have.

Sibanye, for example, has said the permissions, regulations and costs of using Eskom's transmission lines to feed power to its platinum and gold mines from a central solar electricity plant were prohibitive and skewed the economics.

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