South Africa mines plan $2.7 billion investment in power generation

Stock image.

Mining companies in South Africa are considering spending as much as 40 billion rand ($2.7 billion) to construct 2,000 megawatts of power generation capacity, said Roger Baxter, chief executive officer of Minerals Council South Africa.

Mining companies have been pushing to develop their own power plants because of persistent power cuts imposed by state power utility Eskom Holdings SOC Ltd. They are also keen to move away from total reliance on the mainly coal-fired power supplied by Eskom as their investors pay more attention to climate issues.

Those plans have been given impetus by this year’s decision by the government to allow the construction of plants of up to 100 megawatts in capacity without generation licenses. The mining companies are planning to largely install renewable energy such as solar and wind power.

“This would be a game changer for South Africa going forward,” said Baxter, who was speaking at a webinar convened by the Presidential Climate Change Coordinating Commission on Thursday.

While a constant supply of power is a key concern, improving companies’ green credentials is also taking center stage. The European Union is considering imposing tariffs on imported goods that cause a lot of carbon emissions during the production process.

“Unless South Africa changes its energy mix it’s not going to sell its products, Neal Froneman, the chief executive officer of Sibanye Stillwater Ltd., said in an interview last week. “The country has no option, it will be excluded from the rest of the world if we don’t transition in the right way.”

(By Antony Sguazzin and Felix Njini)