As commodity prices are under pressure and operating costs are rising, the National Business Initiative (NBI) has called on mining companies in South Africa to find ways to keep costs low.
“In recent reports, it has been suggested that the mining output will be affected by the latest round of power cuts and that many of these companies will miss production targets,” says NBI energy head Valerie Geen.
She adds that this is especially critical in the current market, which is compounded by lower commodity prices and a global slowdown in demand. Also, the development of the mining industry is linked to the amount of energy available for it to expand, especially in the face of new technologies and a global move to automation of key processes.
Referring to the SA Mine Report published by PwC in November last year, Geen mentions that it indicates that net profit in the mining industry dropped by 78% between 2013 and 2014 from R27-billion to R6-billion. Moreover, the report points out that operating costs in the mining industry increased by 16% over the same period.
She states that the figures indicate that mines need to implement measures in order to save costs at every possible opportunity and one of the most successful methods in which they can achieve this is through the development and implementation of an energy efficiency plan.
“By so doing, mining companies in South Africa could benefit from the tax incentives being offered for achieving energy efficiency. This is because South Africa is the first country in the world to implement a per-kWh-saved-based tax incentive and allows companies to claim for tax deductions after implementing energy efficiency measures,” Geen notes.
As a result, the NBI urges SANAS-accredited professionals to verify these savings and kWh savings as they are reimbursable for one calendar year of energy performance assessments.
Moreover, Geen suggests that there are actions that the mining industry can take to reduce their energy consumption to achieve such incentives, reduce energy costs as well as pioneer energy efficiency in South Africa.
“The mining industry has an important role to play as it is a major consumer of energy in South Africa and cutting consumption is critical to energy security in the short term,” she stresses.