One of the world’s most naturally gifted economies, South Africa, is rich in mineral reserves and natural resources. It is the world’s largest producer of chromium & manganese and is amongst the world’s largest producers of coal, gold and diamonds amongst several other precious and non-precious metals. So it’s only natural that the mining sector is the backbone of the South African economy.
But in recent times, South Africa’s mining industry has been showing a declining contribution to its economy. Volatile commodity prices, currency depreciation, little or no new investments and legacy problems like poor and intermittent power supply are dragging the sector down.
“Today, the mining sector is seeing a slowdown in South Africa and one of the major causes for this is the exposure to rapidly increasing grid tariffs from the utility, Eskom,” says Wayne Glossop, Business Development Manager, Wärtsilä Energy Solutions.
“As a result, mining companies are seeking greater levels of energy independence in order to better manage their own energy costs and reduce their exposure to the above normal tariff increases anticipated from Eskom for the foreseeable future,” he adds.
Currently South Africa is almost entirely dependent on state-owned, national utility company, Eskom for its power needs. Eskom generates more than 90% of South Africa’s power and is the sole purchaser of electricity in the country. But power inefficiencies are on the rise and electricity prices are volatile. Eskom is also saddled with mounting debts. That has cast a dark shadow on the future of several industries including mining.