South Africa is far behind in its work to transition to a carbon-neutral energy system by 2050, and the significant proposed electricity tariff increases being sought by State-owned Eskom could lead to some businesses and industrial hubs being closed down, mining companies have warned.

The companies have pointed out during discussions at this year's Joburg Indaba that Eskom's current proposed 36% increase in electricity tariffs is several times greater than inflation.

"Richards Bay was built up as an industrial hub on the foundation of cheap electricity, including aluminium smelting and large industries. With what is happening to the prices now, the sustainability of that whole industrial hub is under threat today," said metals and mining company Rio Tinto Iron and Titanium Africa operations MD Werner Duvenhage.

"South Africa does not have affordable electricity any longer, although it should. We are getting power to households that cannot afford it and we are sitting with industries that must participate in the world economy, but we are not competitive anymore.

"In terms of beneficiation, we are going to lose that battle because the argument is no longer about the sustainability of electricity supply but about the cost," he said.

Rio Tinto has committed to halving its carbon intensity by 2030 and to be carbon-neutral by 2050. It has announced a few energy deals in South Africa, with more to come, which will provide it with more than 400 MW of renewable power.

Project delays are a concern, however, with Duvenhage pointing out that despite having received approved budget quotes from Eskom, the utility subsequently introduced additional cost increases that led to a seven-month delay to a renewable-energy project that was halfway built.

"When compared to paying Eskom, electricity from this project is cheaper. We are, by delaying such projects, withholding cheap electricity from being used that may also enable Eskom to redistribute the additional electricity to other areas," he noted.

Further, coal and energy metals mining company Exxaro CEO Dr Nombasa Tsengwa expressed dismay at the slow pace of the country's energy transition.

"The reality is that the country is far behind in terms of transitioning the whole energy value chain of generation, transmission and storage to achieve the goal of using no coal for energy by 2050," she said.

There is, however, an opportunity for Eskom and the country to unleash the potential of big businesses to serve the interests of South Africa and the region, coal mining company Seriti Resources Group CEO Mike Teke argued.

"The country has to look at the energy mix, which will inform what Eskom will look like in five years time. However, we cannot wait for policy from government, rather the government must respond to the global agenda, as mining companies are responding."

National policy must incentivise the transition to a low-carbon economy and, therefore, the mining industry should be communicating its demands to government, around which policy for the industry should be formulated, he said.

Any mining region worldwide has its own set of challenges, including specifically in terms of decarbonisation challenges. These must be overcome to mine the ore bodies present in these areas, said Duvenhage.

In South Africa, Rio Tinto is entering into long-term agreements in terms of wind and solar renewables.

"Baseload is the key challenge. How we manage and create baseload generation in an environment in which we have renewables meant that we had to be creative as a company. However, we cannot look to government to provide us with baseload. It is something we have to figure out ourselves," he highlighted.

Additionally, the company is working with its suppliers to reduce Scope 2 emissions.

"There are definitely more opportunities than challenges in the transition, with the ability to form sustainable new businesses and industries to address the challenges," he said.

Seriti, meanwhile, has transitioned to an energy business. "We are investing in renewables, but are not closing our coal mines. South Africa's transition journey is slow compared with other countries and we need more renewable generation in addition to our coal-fired power to move from a more than 80% reliance on coal power to less than 40%.

"To accelerate the transition, I would liberate the energy market. For example, the grid is expensive to expand, but we could open up microgrids and help companies or clusters that want to head in this route," Teke pointed out.

"We must become more aggressive in terms of renewable energy, and we want policies that will assist us to be aggressive in developing renewable-energy systems," he emphasised.

Additionally, a strong energy mix, with wind and solar renewable-energy, and natural gas, sources, would enable the country to be versatile in addressing energy challenges and would help to attract investment, he added.

Meanwhile, Exxaro has reduced its Scope 1 and 2 emissions by 17.71% between 2019 and 2023 by reconfiguring assets and reducing diesel use and reconfiguring pit operations, among others, said Tsengwa.

Partly through self-generation at its flagship coal mine Grootegeluk, in Limpopo, the company has reduced its carbon emissions by 27%. It has added 68 MW of renewable energy into operations. This saves electricity costs and helps to reduce Scope 1 and 2 emissions.

Further, the company is moving into the second phase of its self-generation project, during which it will also see whether it can offer the broader community green electrons produced at its mines in Limpopo and Mpumalanga.

"We are self-generating and solving for energy. While coal is dipping, we are building up our renewables and energy minerals business. We are actively investing and we hope to have reduced our carbon-intensity by 40% by 2026, compared to 2016," she said.

Exxaro is using its core business of coal mining and supply to grow a new diversified minerals business, focused around minerals required to unlock the energy transition, including copper, manganese and aluminium.

"We are taking carbon out of our current operations while we use the value created by our expertise in mining, marketing and selling coal to grow our new business," she said.

Teke added that many people had doubts around the 155 MW wind power station the company's subsidiary Seriti Green was building in Mpumalanga.

"The turbines have been delivered. We are building it now."

The 155 MW wind energy plant is the first phase of a larger 900 MW renewable-energy cluster called Ummbila Emoyeni that will be located between Bethal and Morgenzon, in Mpumalanga.

"The mining industry does not need protection. What we need to do is drive the transition," he said.