Miners welcome South Africa’s plans to open up power generation

CAPE TOWN - Agence France-Presse

South Africa’s announcement that it will open up electricity generation to other players, effectively breaking Eskom’s monopoly, has been welcomed by many, especially the mining industry, a key sector in Africa’s most industrialized economy.

President Cyril Ramaphosa in his annual state of the nation address Thursday night outlined a raft of steps that will allow firms to generate electricity for their own use.

He admitted power cuts in recent months had had a debilitating effect on the economy and vowed to “rapidly and significantly” shore up electricity generation outside the debt-saddled Eskom.

The state-owned utility currently produces more than 90 percent of the country’s electricity.

But it has been crippled by poorly-designed coal-fired power stations, decades of mismanagement and alleged corruption under former president Jacob Zuma. Its debts amount to 450 billion rand ($31 billion).

The mining industry, one of the largest power consumers, has for years been clamoring for legislative changes to ease up licensing to let firms produce their own electricity.

Signs that the government’s position on the issue was shifting came at a mining conference earlier this month where it indicated the laws would be reviewed.

The Minerals Council, an association of mining firms, said it was “encouraged by the president’s commitment to rapidly and significantly increase generation capacity outside of Eskom.”

“The sporadic availability of power and instability of the national grid is... one of the greatest threats to the South African economy,” it said.

On one of the worst days of power cuts last December, some mining firms were forced to suspend operations for at least 24 hours after Eskom implemented severe rationing.

South Africa is the continent’s largest producer of gold and the world’s top platinum miner.