A more pragmatic approach by governments and mining investors to the energy transition is increasingly allowing renewable energy technology solutions to benefit from technical knowledge to improve prices and efficiency.
This is according to Ben Magara, CEO of Exxaro, who told Business Times coal will be a useful asset in responding to price pressures over time, which have been affecting mining operations since Eskom stabilised the grid and suspended load-shedding.
“We are pleased that South Africa and the globe have become quite practical and pragmatic about coal, that we need coal for longer; it is one of the lowest-cost energy sources… and is available nearby and reduces costs.
“As we realise this energy mix, it’s actually going to improve affordability. It’s good to have competition, so I think as you have renewable energy, all these renewable energies are now having to compete, and competition means lower prices to the customer.”
Speaking to Business Times on the sidelines of this week’s Investing in African Mining Indaba in Cape Town, Magara said Exxaro has taken its total capacity from 200MW to 500MW in the last year to accelerate the diversification of its resources in the sector.
He said the company aimed to bring its expertise from coal and logistics into its manganese bulk mining operation.
Those improvements have meant that we are less focused on crisis management and now more focused on strategic growth and the way forward. And the way forward clearly will require us to be even more efficient, to bring in private sector money to invest in these network areas
— Ben Magara, Exxaro CEO
Exxaro has also signed a deal with Acciona Energía over the 138MW Gouda wind farm and 75MW Sishen solar facility, allowing Exxaro to supply its own coal mine with renewable energy, thereby reducing its scope 2 emissions by 25% and reducing electricity costs by R100m annually.
Magara said Exxaro and the private sector were “very pleased” to see improvements in efficiencies in the network industries implemented by Eskom and Transnet, where Exxaro is participating in rail reforms. Eskom has managed to suspend load-shedding for about a full year, and Transnet has effectively dealt with the port bottlenecks of 2023.
“Those improvements have meant that we are less focused on crisis management and now more focused on strategic growth and the way forward. And the way forward clearly will require us to be even more efficient, to bring in private sector money to invest in these network areas.”
Mark Evans, partner at Oliver Wyman, said the unbundling of Eskom into three entities is the right strategic move for the power utility, as it allows Eskom to operate different elements of the network more independently.
“As you bring in the integration of renewables into the network, it will make it easier in the long term. It’s complex in that the tariffs and the tariff models and the wheeling charges … are going to change, but I believe it’s the right answer.”
He said private sector participation in the rail reforms at Transnet was an essential part of the government’s intervention to improve port and rail logistics to optimise the capacity of the mining sector.
“It’s something which can have an absolutely massive impact on the country and needs a lot of help. Transnet cannot do it by itself. The private sector has to get involved, and the question is not a matter of when; it’s a matter of how.”
Tebello Chabana, senior executive of public affairs and transformation at the Minerals Council, told Business Times the sector hoped the government will acknowledge that heavy energy users are going through tough times and thus commit to finding solutions to ease their energy price pressures.
“On the electricity side, [we need] an appreciation that, although there’s a 12% increase [in the electricity tariff], the mines actually experience a 19% increase. So, the mines are being hard hit by the electricity crisis. But if you look at the smelters, they are in a worse position.”
Business Times
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