An emergency meeting of the central bank’s monetary policy committee on Wednesday increased policy rate by 300 basis points to 22% -- the third ... time since January -- as the country struggles with rising inflation and the downward spiral of the cedi.
The project will make Gold Fields the first mining company in South Africa to build, own and operate its own solar plant on such a large scale, Preece says. The project, planned to be operational by mid 2022, addresses the “opportunity cost of lost production during frequent load curtailments” imposed by Eskom, he says.
Miners in Africa’s most industrialised country have struggled with the impact of Eskom’s power cuts. In May, Minerals Council South Africa CEO Roger Baxter said Eskom’s performance is “one of the critical binding constraints to higher investment and economic growth.” The council argues that Eskom does not have enough reliable electricity generation capacity to keep the lights on, let alone support higher economic growth.
Once completed, the South Deep plant has the potential to provide around 22% of the mine’s average electricity consumption, meaning a cost saving of roughly R120m ($8.7m) per year, Preece says. The plant will cut the company’s carbon footprint by 100,000 tonnes per year to 390,000 tonnes.
Key to any significant potential future expansion would be the relaxation of current arrangements to allow Gold Fields to feed excess electricity back into the Eskom grid, or take on other economically viable storage options, he adds.
Allowing miners the flexibility to generate their own power could revitalise an industry which has been lagging behind in the country.
- Gold Fields first applied for a solar licence at South Deep in 2017, finally obtaining permission from regulators in February this year.
- The minerals council argues that cutting the red tape would allow more of such projects to see the light of day.
- It proposes that the department of mineral resources and energy establishes a “one-stop-shop” to accelerate own-use, private-sector electricity generation with the goal of licensing approvals within 90 days.
Australia shows the way
Gold Fields is also considering building new solar plants outside South Africa. Its Ghanaian mines, Tarkwa and Damang, are currently studying renewable power options including solar. Currently, the mines have dedicated gas plants powering their operations and “given that gas is a low-carbon solution, we have a bit of time before implementing renewable options,” Preece says.
Gold Fields also operates mines in Australia and Peru, and plans to mine at Salares Norte in Chile.
- The Chile project is in line with the budget and is on schedule despite the impact of Covid-19, Preece says.
- Construction is on track for completion by the end of 2022, with gold production planned to start in the first quarter of 2023.
- Gold Fields already uses renewable energy sources at two of its Australian mines, Agnew and Granny Smith. Another solar plant at the Gruyere mine in Australia is being built and should be completed by the end of 2021.
South Africa needs to follow Australia’s example. Research from Sandra du Toit of EY Corporate Finance in Johannesburg indicates that in 2020, Australia deployed new renewable energy 10 times faster per head than the global average. And, she argues, South Africa has better natural solar and wind power potential than Australia.
Renewable energy projects need to be fast-tracked by South Africa’s regulators to protect both the mining industry and the environment.
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