Pan African Resources’ renewable energy plant pays off
15 February 2023 - 17:43
by Andries Mahlangu
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Mid-tier gold producer Pan African Resources plans to ramp up spending in large-scale solar photovoltaic renewable energy projects after it saved millions of rand in energy costs at its Mpumalanga operations.
The group, which commissioned a renewable energy plant at its Evander Mines in May 2022, said on Wednesday it was saving about $145,000 a month in electricity costs.
“We have now convincingly demonstrated the business case for renewable energy in the South African mining industry and will maintain our strategic objective to expand this footprint significantly in the coming years,” CEO Cobuts Loots said.
The company, valued at R7bn on the local bourse, is hoping for a turnaround in fortunes after reporting a steep decline in profits for the six months ended December.
The miner’s profit declined by 37% to $29m because of a 14% decline in production in the period, largely due to the underperformance of its Barberton mines’ underground operations.
The underground operations at ageing Barberton mines have struggled to maintain and increase production due to what the company said was inflationary increases in labour and energy costs.
Spanning more than 130 years, the mines were increasingly deeper and costly to operate.
Loots said measures had been put in place to ensure the Barberton operations reverse the decline registered in the six months under review. One of the measures is the reconfiguring of the Fairview and Sheba Mines’ shift cycles to 24-hour operations and converting Consort Mine to a contract mining model.
“These restructuring plans, together with other initiatives to increase mining flexibility, will ensure the sustainability of these operations in the future.”
The prevailing rand gold price is seen as another tailwind for Pan African, which operates an underground and tailings retreatment operation in Barberton, Mpumalanga, as well as the Elikhulu tailings retreatment plant and Evander underground mine in the same province.
The rand has weakened against the dollar in 2023, more than compensating for the recent pullback in the gold price, which remains sensitive to US inflation and interest rates outlook.
The gold price stood at $1,834oz in early afternoon trade and was down some 8% below its peak of $1,95303oz reached on February 1, according to Infront data.
Gold output at the group level consequently dropped 15% to 92,307oz, but the company still kept the production forecast for the full year intact at 195,000oz to 205,000oz after steps to address the situation.
Eskom’s inability to provide enough power supply affected production by about 5% at Evander mines.
High costs and unreliable energy supply are key concerns in the industry where electricity is projected to rise to 12.5% of costs by 2024 from 9% now.
The higher cost of electricity means the share of energy in intermediary inputs will increase from 24% to 38% in gold mining by 2024, according to industry body Minerals Council SA. Energy regulator Nersa recently granted power utility Eskom tariff increases of 18.65% for 2023 and 12.7% in 2024.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Pan African Resources’ renewable energy plant pays off
Mid-tier gold producer Pan African Resources plans to ramp up spending in large-scale solar photovoltaic renewable energy projects after it saved millions of rand in energy costs at its Mpumalanga operations.
The group, which commissioned a renewable energy plant at its Evander Mines in May 2022, said on Wednesday it was saving about $145,000 a month in electricity costs.
“We have now convincingly demonstrated the business case for renewable energy in the South African mining industry and will maintain our strategic objective to expand this footprint significantly in the coming years,” CEO Cobuts Loots said.
The company, valued at R7bn on the local bourse, is hoping for a turnaround in fortunes after reporting a steep decline in profits for the six months ended December.
The miner’s profit declined by 37% to $29m because of a 14% decline in production in the period, largely due to the underperformance of its Barberton mines’ underground operations.
The underground operations at ageing Barberton mines have struggled to maintain and increase production due to what the company said was inflationary increases in labour and energy costs.
Spanning more than 130 years, the mines were increasingly deeper and costly to operate.
Loots said measures had been put in place to ensure the Barberton operations reverse the decline registered in the six months under review. One of the measures is the reconfiguring of the Fairview and Sheba Mines’ shift cycles to 24-hour operations and converting Consort Mine to a contract mining model.
“These restructuring plans, together with other initiatives to increase mining flexibility, will ensure the sustainability of these operations in the future.”
The prevailing rand gold price is seen as another tailwind for Pan African, which operates an underground and tailings retreatment operation in Barberton, Mpumalanga, as well as the Elikhulu tailings retreatment plant and Evander underground mine in the same province.
The rand has weakened against the dollar in 2023, more than compensating for the recent pullback in the gold price, which remains sensitive to US inflation and interest rates outlook.
The gold price stood at $1,834oz in early afternoon trade and was down some 8% below its peak of $1,95303oz reached on February 1, according to Infront data.
Gold output at the group level consequently dropped 15% to 92,307oz, but the company still kept the production forecast for the full year intact at 195,000oz to 205,000oz after steps to address the situation.
Eskom’s inability to provide enough power supply affected production by about 5% at Evander mines.
High costs and unreliable energy supply are key concerns in the industry where electricity is projected to rise to 12.5% of costs by 2024 from 9% now.
The higher cost of electricity means the share of energy in intermediary inputs will increase from 24% to 38% in gold mining by 2024, according to industry body Minerals Council SA. Energy regulator Nersa recently granted power utility Eskom tariff increases of 18.65% for 2023 and 12.7% in 2024.
mahlangu@businesslive.co.za
Rand gold price at record high as more miners return to limited operations
Pan African’s gold sales increase by double digits
Illegal mining issue too big for companies to handle on their own
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
Record gold output beats weak prices to boost Pan African earnings
Pan African reckons there’s gold in Sudan’s hills
Pan African Resources buys parts of Mintails SA in R50m deal
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.