https://www.miningweekly.com
Africa|Energy|Eskom|Export|Financial|Mining|Products
Africa|Energy|Eskom|Export|Financial|Mining|Products
africa|energy|eskom|export|financial|mining|products

Mining industry to ‘push back strongly’ against Eskom’s proposed tariff hikes – Pienaar

Image of Minerals Council South Africa (MCSA) chief economist Hugo Pienaar

Hugo Pienaar

7th November 2024

By: Irma Venter

Creamer Media Senior Deputy Editor

     

Font size: - +

South Africa’s mining industry will “certainly push back strongly” against Eskom’s proposed tariff hikes, says Minerals Council South Africa (MCSA) chief economist Hugo Pienaar.

If granted, Eskom’s tariff-hike application at the National Energy Regulator of South Africa (Nersa) for the 2025/26 financial year will see direct Eskom customers pay 36.15% more on April 1 next year, with the price at municipal level increasing by 43.55% from July 1.

From 2012 to 2025, Eskom has, on average, applied for a 19.62% increase, but has been granted 10.79% from Nersa – this while average headline CPI has been 5.2%.

“Given the history and averages granted, Eskom is very unlikely to get the 36%,” noted Pienaar as he addressed the Chromium 2024 conference in Cape Town.

“But they could get 20%, and even that will be a further blow to more beneficiated products – typically the more energy-intensive products.

“Now bear in mind that there is a big contradiction here. We are increasingly hearing from government that they want to push beneficiation in South Africa.

“However, these processes are, to a large extent, energy extensive, and would require competitive electricity costs, and [Eskom’s application] will certainly not do that.”

While there had been a number of positive developments under South Africa’s new Government of National Unity, high electricity prices remained a key constraint on mining and the general economy, warned Pienaar.

He added that the MCSA was keeping its eye on another potential risk – how government was planning to execute its plans to boost beneficiation.

“Will it be a carrot or stick approach? We would favour the carrot approach, where government puts in place incentive structures to make it more profitable to beneficiate, as opposed to export controls and the like.”

Pienaar highlighted that chrome production was one of the stars in South Africa’s mining industry.

Over the last 30 years, since 1994, on average, mining production had shrunk by roughly 0.5% in South Africa.

“It is the only sector in South Africa that has declined over such a prolonged period.”

However, chrome ore production has seen a sixfold increase in output over the last 30 years.

“On average, in real terms, that sector is growing by 8%,” said Pienaar.

“It has been one of the fastest-growing, if not the fastest growing, subsectors of mining in South Africa – a success story.”

Ferrochrome production and exports have not, however, mirrored this success, with South Africa ceding its dominance of this beneficiated chrome product to China.

Ferrochrome is a ferroalloy which includes iron and chromium.

South Africa now only retains its dominance in chrome ore.

Eighty-two per cent of all chrome ore exports in the world in 2023 came from South Africa, and 92% of all chrome ore exports in 2023 went to China.

 

Edited by Creamer Media Reporter

Comments

Showroom

John Ratcliffe
John Ratcliffe

At John Ratcliffe, we are aftermarket specialists for heavy-duty on and off-road vehicles. We engineer and retrofit advanced safety systems, engine...

VISIT SHOWROOM 
Weir
Weir

Weir is a global leader in mining technology. We recognise that our planet’s future depends on the transition to renewable energy, and that...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.254 0.285s - 145pq - 2rq
Subscribe Now