Mining sector wants to generate its own electricity
JOHANNESBURG – The mining industry has called for the government to intervene urgently to enable greater private electricity generation for own use, as Eskom’s power cuts have severely affected production.
Public Enterprises Minister Pravin Gordhan and Mineral Resources Minister Gwede Mantashe briefed the Cabinet on Friday to discuss proposals to stabilise the electricity supply.
Early last week, President Cyril Ramaphosa said Eskom had requested the government to consider some proposals such as self-generation and floating generators to alleviate pressure on the national grid. “They also proposed that we should look at self-generation to help relieve the pressure on the system as a whole,” Ramaphosa said.
Last week, the mining industry was forced to scale back production and suspend underground operations after Eskom ramped up load shedding from Stage 4 to Stage 6, cutting 6 000MW of electricity from the national grid.
The power outages also contributed to the mining industry’ 2.9 percent loss year-on-year in October as output fell for a third month in a row, throwing the sector’s contribution to the economy further into a tailspin.
The Minerals Council said the situation was desperate. The council demanded urgent action by Mantashe to enable the rapid establishment of self-generation facilities to supplement Eskom’s constrained capacity, and open the way for further generation by independent power producers.
Minerals Council chief executive Roger Baxter said Stage 6 load shedding basically meant that mines were confined to “essential demand”, as Stage 4 alone requires a 20 percent demand curtailment.
“The impact of Stage 6 and Stage 4 load shedding is devastating for the mining sector, as most mining companies will not only lose their week’s production, but that this affects the viability of many of these mines,” Baxter said. “Eskom is essentially making an industrial policy decision to downscale the mining sector when they implement Stage 4 and Stage 6 load shedding,” he pointed out.
The Minerals Council also called for the amendment of schedule 2 of the Electricity Regulation Act, which would lift the licence requirement for self-generation regardless of plant size.
Unregulated generation is currently limited to 1MW plants, with indications that this will be increased to 10MW. Baxter said the regulatory requirements to licence self-generation for own use were cumbersome and very time consuming and also involve environmental, land use, and the energy regulator’s generation licences.
“We urge the government to take decisive steps to fix Eskom, but also enable the private sector to bring on stream substantial self-generation capacity,” Baxter said. “These new self-generation plants would be at no cost to the government, taxpayers or Eskom, and help provide the room for Eskom to get its house in order.”