- Mining companies warn that Eskom’s proposed 36% tariff increase threatens South Africa’s industrial hubs and energy transition.
- Rio Tinto and Exxaro aim for renewable energy and emissions reductions but face challenges from project delays and rising costs.
South Africa is lagging in its efforts to transition to a carbon-neutral energy system by 2050, with mining companies warning that substantial proposed electricity tariff increases by state-owned Eskom could threaten the viability of businesses and industrial hubs. At this year’s Joburg Indaba, concerns were raised about Eskom’s suggested 36% increase in electricity tariffs, which far exceeds the inflation rate.
Werner Duvenhage, Managing Director of Rio Tinto Iron and Titanium Africa, highlighted that Richards Bay, an industrial centre built on affordable electricity, now faces sustainability challenges due to rising energy costs. He emphasised that the competitiveness of South African industries is at stake as the country struggles with high electricity prices that undermine its position in the global market.
Rio Tinto has committed to reducing carbon intensity by 50% by 2030 and achieving carbon neutrality by 2050. The company is pursuing renewable energy projects in South Africa to secure over 400 MW of renewable power. However, delays in project approvals and rising costs from Eskom have hindered progress, with one renewable energy project facing a seven-month setback.
Dr Nombasa Tsengwa, CEO of coal and energy metals mining company Exxaro, expressed frustration over the slow pace of South Africa’s energy transition, noting that the country is falling behind in overhauling its energy generation, transmission, and storage systems to meet the goal of eliminating coal by 2050.
Mike Teke, CEO of Seriti Resources Group, argued for re-evaluating South Africa’s energy mix. He suggested that Eskom adapt to global energy trends and not wait for government policy changes. He stressed the need for national policies that incentivise a low-carbon economy and encourage mining companies to engage with the government on energy strategies.
Despite the challenges, Duvenhage from Rio Tinto sees opportunities in the transition, advocating for innovative solutions to ensure reliable baseload energy from renewables. The company also works to reduce Scope 2 emissions by collaborating with suppliers.
Exxaro has made significant strides in emissions reduction, achieving a 17.71% decrease in Scope 1 and 2 emissions from 2019 to 2023. The company’s self-generation projects at its Grootegeluk coal mine in Limpopo have resulted in a 27% reduction in carbon emissions, aided by the addition of 68 MW of renewable energy.
Exxaro is also in the second phase of its self-generation project, exploring the possibility of providing renewable energy to surrounding communities. The company aims to cut its carbon intensity by 40% by 2026 compared to 2016 while expanding into a diversified minerals business focused on critical materials for the energy transition.
Meanwhile, Teke is confident in developing Seriti Green’s 155 MW wind power station in Mpumalanga, the first phase of a larger 900 MW renewable energy cluster. He reiterated that the mining sector does not require protection but should drive the energy transition forward.