The mining sector in South Africa is a vital component of the economy, accounting for 6% of the nation’s GDP and significantly influencing economic stability and growth.
South Africa stands out on the world stage with its rich deposits of manganese, chrome, platinum, gold, iron ore and coal — making it a powerhouse for the production of minerals critical in the sustainable global economy.
There is a growing emphasis on renewable energy. In line with worldwide sustainability movements and South Africa’s just energy transition framework, we have seen many mining companies diversifying to include renewable energy solutions. This has a number of benefits, including reducing carbon emissions (decarbonisation), cutting electricity costs and guaranteeing energy security and flexibility.
The transition to renewable energy sources is seen in the rise in investments in recent years, driven by sustainable commitments.
In 2022 the mining sector experienced a surge in energy initiatives, with 89 projects launched by independent power producers (IPPs), generating 6.5GW for 29 mining companies. This was made possible by the removal of the licensing threshold for private generation facilities.
Of this total, solar accounted for 6.2GW; wind 0.2GW; battery storage 84MW; while biomass added 8MW. The optimal approach, however, is a mixture of technologies.
According to a recent update from Operation Vulindlela — which, among other things, aims to modernise and transform electricity supply — a total of 130 large-scale IPP renewable energy initiatives are being developed, aimed at generating 22,500MW of power.
This reflects an investment value of R390bn. Remarkably, the mining sector will draw power from about 70% of these initiatives — amounting to 90 projects and a total capacity of nearly 15,800MW. This translates to about R275bn in investment in the years ahead to future-proof existing mining operations.
Several factors are driving mining companies’ transition towards renewable energy sources. These include:
- Reducing carbon emissions: many mining companies have set themselves ambitious goals, aiming to reduce their scope 1 and 2 emissions by up to 30% by 2030. Including renewable energy in the energy mix helps them accelerate the reduction of carbon emissions in their operations;
- Financial efficiency: renewable energy sources such as solar and wind have become more affordable than traditional tariffs. Prices are negotiated between the IPPs and private off-takers, in this case mining companies. The pricing is competitive and can be tailored to specific energy demands — and provide certainty of future energy costs, leading to lower operational expenses;
- Investor, environmental, social and governance demands: worldwide, investors prefer sustainable mining practices, urging companies to demonstrate a reduction of carbon emissions by using sustainable production means, including renewable energy;
- Energy security: this is a critical concern for mining companies, given their heavy reliance on consistent and substantial power supply to operate machinery, process materials and maintain safety standards. Implementing a renewable energy mix that includes solar, wind and battery storage initiatives can significantly improve energy security; and
- Flexibility: mining companies are well positioned to benefit from the evolving regulatory and market structure in South Africa’s energy sector. The changes allow multiple generators to invest in new capacity to meet current and future demand, reducing the risk of reliance on a single supplier. This model will provide mining companies with flexibility in terms of (using) different suppliers, tariffs and power purchase agreements.
Mining companies operating in South Africa are at the forefront of the shift towards greener energy alternatives. At present about 15,800MW of renewable energy initiatives are under way in this industry. These initiatives help mining companies lower expenses while ensuring energy reliability and supporting their goals for reducing carbon emissions.
Despite potential challenges, the shift towards renewable energy represents a vital move towards a more sustainable economy.
In 2022 Standard Bank set a goal of mobilising R250bn for sustainable finance by 2026. The bank has recently updated its group sustainable finance targets, aiming to mobilise more than R450bn by 2028. This goal exceeds the R177bn secured since 2022, with R50.5bn dispatched in 2024, and just more than R70bn expected in 2025. Some of this funding will be used to support renewable energy initiatives within the mining sector.
The group is committed to a just transition — ensuring energy security while supporting decarbonisation efforts.
We match our words with action in driving Africa’s sustainable growth. In the years ahead, we look forward to collaborating with like-minded partners who share our vision for this continent we proudly call home.
• Moamogoe is executive head of metals & mining at Standard Bank Corporate and Investment Banking
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.