Gwede Mantashe, South Africa's mineral resources and energy minister, speaks on the opening day of the Investing in African Mining Indaba in Cape Town, South Africa, on Monday, May 9, 2022. Mining executives, investors and government ministers are meeting in Cape Town for the African Mining Indaba, the continents biggest gathering of one of its most vital industries. Photographer: Dwayne Senior/Bloomberg via Getty Images
Mineral resources and energy minister Gwede Mantashe on Monday urged investors at the 2023 Mining Indaba to invest in the country because the government had a plan to resolve load-shedding.
During his opening address, in which he called South Africa a mining destination of choice, Mantashe presented a four-point plan that he said would help to overcome load-shedding within the next 12 months.
“This proposal has been put forward to resolve load-shedding and it will give us space to work on long-term energy security,” Mantashe said.
Load-shedding is expected to be a key talking point at the 29th annual Investing in African Mining Indaba. According to Mantashe, the country lost an estimated R1 billion a day last year due to rolling blackouts.
Power supply disruptions in 2022 had led to a “decline in mineral production across all commodities”, he said.
The first point of the plan was improving the energy availability factor through the focused, funded and planned maintenance of existing power stations, said the minister.
The energy availability factor is the percentage of maximum energy generation that a power plant is capable of supplying to the electrical grid.
“At the centre of our current energy challenges is the decline in the energy availability factor from an estimated 75% to 49%. Therefore, the most feasible and logical option to exercise to resolve load-shedding is by arresting the decline in the energy availability factor,” said Mantashe.
“Failure to attend to and address the declining Eskom plant performance and subsequent higher stages of load-shedding is an irritation to society and has the potential of pitting society against the government,” he said.
The second point in the plan was the procurement of emergency or short-term power from existing facilities and private power plants.
The third point was the purchase of additional electricity from neighbouring countries, which could happen in the short to medium term.
The final point was improving skills capacity at Eskom.
South Africa has been experiencing the worst load-shedding since rolling blackouts started 16 years ago.
Mantashe said the price of crude oil averaged $100 a barrel in 2022 and, as a result, mining companies had to pay exorbitant prices for fuel and electricity. “South Africa experienced more power supply disruptions in 2022 and this led to a decline in mineral production across all commodities.”
In November 2022, mining production contracted by 9%, marking a 10th consecutive month of contraction in volumes produced.
At a media briefing after his opening address, Mantashe said there had not been an excessive number of jobs lost in the mining sector because of load-shedding.
“There is no flood of jobs that have been lost because of load-shedding and that’s why Gold Fields is an example. They took advantage of generating their own additional energy and, when the industry was declining [as a result of load-shedding] 9% year-on-year, Gold Fields grew 10% … that is innovation and that is what will save a number of jobs,” he said.
South Africa’s unemployment stands at 32.9% of the labour force.
Asked at the media briefing which countries the department would look at to obtain additional capacity, director general Jacob Mbele said: “I am aware that Eskom has secured about 200 megawatts from the region, specifically from Mozambique and Zambia.”
Renewable energy is often punted as one of the solutions for South Africa’s constrained energy grid. Mantashe said: “Releasing more renewable energy is a good idea for sustainability in the long term but, if you upload a project for renewable energy, it will not stop load-shedding by the weekend.
“You need time to build the facility and then it takes time to contribute to the reduction of load-shedding. But what is important at this point in time is to pay attention to the decline in the electricity availability. And that is why we have the proposal to try to resolve load-shedding.”