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Eskom tariff hikes could see struggling mines fold, says Minerals Council

The National Energy Regulator of South Africa has approved a tariff hike of 9.41% for this year.

FILE: Miners at Amplats' Union mine in Rustenburg. Picture: www.angloamericanplatinum.com

JOHANNESBURG/CAPE TOWN - The Minerals Council is concerned that the new power price increases could see thousands of mine employees now lose their jobs.

The National Energy Regulator of South Africa has approved a tariff hike of 9.41% for this year.

It has also approved an 8.1% hike for 2020, followed by 5.2% for the year after.

The council says that this will have a devastating effect on mines.

The Minerals Council says a steep increase was expected but this will have a major impact on mines.

Chief economist for the council, Henk Langenhoven: "This will have a devastating impact on the mines, especially the deep mines - gold mines, the smelters, the platinum mines."

He says that Eskom needs help but this is higher than expected.

Langenhoven says the increases could see the end of a number of mines that have been battling to survive.

"A large proportion of them are either loss-making or marginal and this will push them over the edge."

Nersa says the requirements of business, the public, and the power utility were taken to account when taking its decision on tariffs.

Meanwhile, the Cape Chamber of Commerce and Industry is in two minds about the increases.

It says the power utility needs money to fix its many problems but adds that consumers and businesses have been placed under added strain.

The chamber's Janine Myburgh: "Naturally, we are pleased that Nersa has curbed Eskom's demands but this does not solve the problem. It is now up to Eskom to cut costs."