150,000 mining jobs at risk over Eskom tariff plans, warns Minerals Council SA

South Africa could lose all but one of its gold mines along with 150,000 mining jobs if Eskom is granted permission to enact a 15% per year tariff increase over the next three years, according to Minerals Council SA.

The council’s chief economist Henk Langenhoven warned that the 15% increase will result in a cumulative increase in energy prices of 75% by 2021, which would critically damage an already fragile industry.

South African gold production would fall from 140 tonnes a year to around 20 tonnes, all from a single mine. In addition, three quarters of platinum group metal (PGM) miners would become marginal or unprofitable.

“A price increase is not the solution on its own. Eskom has to be restructured and the state has to intervene,” said Langenhoven at a media briefing ahead of a February 1 presentation to the National Energy Regulator of South Africa (Nersa).

“The number of mining and smelting customers would fall to 650 from 1,000 if tariffs of 15% were introduced and revenue would instead fall to R19 billion as mines, smelters and refineries close. They will accelerate their death spiral,” he said.

Troubled national utility Eskom is battling debts of R419 billion and has to begin servicing debt in March.

@ABNetworkOnline