Wed, 26 Jun 2019

The Minerals Council South Africa has said that as many as 90 000 jobs in the country's mining sector could be at risk "solely as a result" of recent electricity tariff increases.

"Given the mining sector's dependency ratio of 10 people supported by each mining job, the potential socio-economic implications for the country are dire," the industry body said in a presentation on the impact of the electricity prices hikes.

National Energy Regulator Nersa announced earlier in the month that electricity prices will rise by 9.41% in 2019/2020, 8.1% in 2020/2021 and 5.2% in 2021/2022.

The embattled power utility is not making a profit from selling electricity at current prices.

Fin24 previously reported the tariff increases for the next three years are on top of the 4.41% hike approved by Nersa in October, on Eskom's Regulatory Clearing Account (RCA) application. The RCA refers to funds Eskom can recover due to an electricity shortfall or an escalation in operating costs.

The tariffs were below what Eskom had asked for.

The Minerals Council said that while the tariff increases were below what Eskom had applied for, the effects on the local industry would be significant by raising the cost of production.

"The substantial tariff increases that have been awarded will have a major impact on the industry's cost structure, jeopardising the viability of marginal and loss-making mines and, inevitably, accelerating job losses at energy-intensive mines in particular."

The power utility was also granted a R69bn support package over three years in Finance Minister Tito Mboweni's maiden Budget in February.

Over 10 years the support package is expected reach R150bn.

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