Eskom's proposed tariff hikes risk making mining unsustainable — minerals council

In 2017, South Africa accounted for only 1% of global exploration. The council would like to see this increase to about 5%. (AFP)

In 2017, South Africa accounted for only 1% of global exploration. The council would like to see this increase to about 5%. (AFP)

Granting Eskom the type of tariff hikes it is requesting from the National Energy Regulator over the next few years risks making mining in the country unsustainable, especially deep underground mining, according to the chief executive of the Minerals Council of South Africa, Roger Baxter.

The debt-laden power utility is asking for a 15% annual tariff hike for three years.

Baxter was speaking at the said at the start of the four-day Mining Indaba 2019 in Cape Town on Monday.

Illegal mining is another growing problem that Baxter highlighted. This includes illegal miners accessing existing mines, as well as the illegal mining of mine dumps, he said.  The council is also liaising with government in this regard, he said.

Baxter said the council would also like to see more exploration in the local industry, noting that in 2017, South Africa accounted for only 1% of global exploration. The council would like to see this increase to about 5%.

“We believe the government is now recognising that exploration is mainly done by the venture capital side and that ownership requirement, especially on the greenfield side, had to be removed,” said Baxter.

“We do not always agree with government on issues, but it is about getting together and sometimes having to make compromises, which are not always a bad thing. We have already come a long way.”

‘New era of hope’

“The government is committed to solve a myriad of issues in the South African economy. A 1% growth in the economy is just not enough. We are having intense and frank engagement with government to see how we can get each of the mining sectors back on track again,” he said.

Topics of engagement include regulatory uncertainty and rail constraints.

Asked whether he expects a “wait and see” attitude from investors in the mining industry until after the national election, Baxter said that while elections come and go, the council’s approach is to continuously try to create an environment conducive for mining.

“We are not yet where we want to be, but we are pointing in the right direction and are in a better position now,” he said.

The council’s priorities include a focus on the improvement of safety and health in the industry, building better relationships with government and ensuring improved use of technology and modernisation.

“We must get ongoing regulatory improvement to increase our investment attractiveness. There are great opportunities if the industry and government work together,” Baxter concluded. — Fin24

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