Consultancy firm SRK issued a short analysis following a talk by South Africa鈥檚 Minister of Mineral Resources and Energy, Gwede Mantashe, at the Mining Indaba conference in Cape Town, where he highlighted the importance of renewables for the mining industry.
According to SRK director Andrew van Zyl, given the positive movements in some commodity prices, there is no better time to consider investing part of miners鈥� windfall gains to create their own renewable energy generating capacity.
For SRK, investing in renewables relates to issues of rising electricity prices from the grid, as well as to mines鈥� environmental commitment and future carbon tax liabilities
鈥淭he mining sector continues to struggle with costs rising faster than productivity 鈥� and the administered price of electricity from Eskom has clearly been an important and unavoidable contributor to this headache,鈥� Van Zyl said. 鈥淎s renewable energy technology has lowered the cost of solar and wind energy, for instance, private producers now have the opportunity to peg a portion of their future energy costs. Being partially off-grid will also make mining companies less vulnerable to the full impact of load shedding which is very disruptive to continuous operations in the mining industry.鈥�
In the expert鈥檚 view, the mining industry鈥檚 commitment to a greener environment and reducing its carbon footprint should play a role in companies鈥� decision to invest in green power.
Van Zyl believes governments鈥� application of a carbon tax should also be considered as it will soon have a more direct impact on mining鈥檚 bottom line.
鈥淚t, therefore, makes sense for mines to be considering alternative sources of energy to augment coal-fired power,鈥� Van Zyl said. 鈥淲hile contributing to their environmental goals, it could also potentially reduce their carbon tax exposure.鈥�
Van Zyl emphasized that the world鈥檚 leading financial institutions are also looking carefully at how mines address their climate change impacts, for example, before approving loans.
鈥淏uilding internal energy generation capacity from renewable sources is likely to become a more popular mechanism for mines to send the right message to lenders,鈥� he said. 鈥淓ven if mines are not 鈥� for now 鈥� able to sell any of their own power back into South Africa鈥檚 national grid, there are still many good economic reasons to consider renewable self-generation options.鈥�