Just about every mining company you speak to these days has renewable energy in its sights and all report that initial indications are that solar power installations beat the Eskom tariff – and that was before the National Energy Regulator of South Africa (Nersa) granted its latest tariff increase.

While many headlines stated that Nersa had granted a 9.41% increase, Mining Weekly’s associate publication, Engineering News, made sure that the effective 13.82% increase received the correct prominence.

This is because the 9.41% should not be viewed in isolation. Sure, Eskom’s allowable revenue of R206.38-billion for 2019/20 translates into a tariff increase of 9.41% from April 1, but that excludes the 4.41% rise sanctioned following adjudication of three Eskom regulatory clearing account applications.

That level of effective electricity tariff increase will intensify self-generation plans, already under study by Harmony Gold, Anglo American Platinum (Amplats), Royal Bafokeng Platinum (RBPlat), Assore and Orion Minerals. In Zimbabwe, Karo Mining is working with government on renewable energy, which is already being gene- rated at several operations across the African continent.

Nersa’s 13.8%increase in the financial year 2019/20 is more than double the current inflation rate and a stretch for mining businesses and municipalities.

Also granted is 8.1% in 2020/21 and 5.2% in 2021/22 in terms of the multiyear price determination period for April 1, 2019, to March 31, 2022. Minerals Council South Africa notes that the increases amount to a compounded increase of 9.7% over three years, which is 24% higher than the current electricity tariff.

Minerals Council chief economist Henk Langenhoven says the increases will jeopardise the viability of marginal and lossmaking mines, inevitably accelerating job losses at energy-intensive mines in particular.

He finds it disappointing that the regulator has opted to support Eskom’s own inevitable downward spiral that will come as a result of inflated tariff increases and declining electricity use by a critical consumer.

Mining, which consumes 30% of Eskom’s yearly power output, has worked closely with Eskom to allocate demand to off-peak hours and to pay for its consumption early. This supports the financial wellbeing of Eskom and helps ensure the supply of electricity to the country as a whole at current costs.

If the mining industry’s use declines as tariffs make certain opera- tions and activities unprofitable, Eskom will not achieve its targeted sales volumes. This will inevitably result in additional substantial increases in electricity prices across the country, which will have to be paid by industrial and private consumers alike.

Meanwhile, Eskom will be hurt should Amplats come forward with its own 100 MW at its Mogalakwena mine, in Limpopo, Harmony with its own 30 MW in the Free State, RBPlat with partial load for the Bafokeng Rasimone Platinum Mine and a housing development in Rustenburg, and Orion Minerals with a 35 MW solar and wind energy hybrid power plant at Prieska in the Northern Cape. Self-generation success will breed more success, with third-party renewable-energy companies doing all the hard yards and mines merely signing power supply agreements.