In a move that suggests companies are taking advantage of structural reforms in the ailing economy, Harmony plans an aggressive renewable energy strategy to address a carbon tax bill of up to R350m a year.
The country’s largest gold miner wants to source less than half its electricity from the coal-burning state-owned monopoly by 2030, using a planned 30MW of solar energy as well as growing quickly into the 100MW of licence-free embedded generation President Cyril Ramaphosa unveiled earlier in June.
The plans are now to ramp up its first phase of renewable energy generation to 100MW within two years before adding a further 120MW of solar, wind and liquefied natural gas, provided the scheme can gain access to Eskom’s grid to move electricity around the country.
Harmony’s foray into solar energy will be built in three equally sized phases, with the first to start construction this year, said Melanie Naidoo-Vermaak, Harmony’s executive in charge of sustainable development. “We also have an ambitious pipeline of renewables at various stages of development,” she said.
One of these is biogas, using land around Welkom and Virginia in the Free State that is not fit for agriculture for energy-rich plants that would be used to generate electricity in biogas plants.
The solar projects for Harmony’s mines in the Free State would reduce the consumption of Eskom electricity by 4% and by extension reduce its exposure to greenhouse gases in operating deep-level mines as well as in the processing of gold.
Harmony has negotiated solar power purchase agreements with a third party, which keeps the upfront construction cost of these plants off its balance sheet. The payment for the plants will be built into the tariffs Harmony will pay.
Aside from Harmony demonstrating to investors, lenders and customers its commitment to boost its environmentally friendly credentials, the projects highlight the advantages of removing structural impediments that business leaders have said would unleash a wave of private sector investments.
Transnet
The Minerals Council SA, an industry body group, has estimated there are R27bn worth of energy projects with 1.6GW of capacity in the mining industry alone that could be unlocked by the 100MW threshold.
Comments from Harmony’s senior ranks came on the same day as Ramaphosa unveiled plans to set up a National Ports Authority within Transnet that will have its own board and budget to invest in the country’s eight ports.
The move is meant to boost the functioning of SA’s ports by ring-fencing revenue from port operations to upgrade port infrastructure, instead of channelling the funds to the wider Transnet group.
It will also provide the private sector with the opportunity to team up with the government to improve terminal operations and infrastructure at ports.
A report released by the World Bank in May ranked SA ports among the worst performers in the world, citing a range of issues from ageing infrastructure to staffing shortages.
Ramaphosa said an essential part of addressing the challenges faced by SA’s ports is to create a clear separation between the roles of the infrastructure owner, which is the Transnet National Ports Authority, and the terminal operator, which is Transnet Port Terminals.
“The creation of a separate subsidiary will allow the ports authority to make its own investment decisions and will ensure that it treats all terminal operators fairly and equally in the interests of port users.”
Ramaphosa said during a news conference at the port of Cape Town, which is located on one of the busiest international shipping routes and is particularly important for the export of fresh fruit and wine.
He said that together with the restructuring of Eskom, which is being split into three entities, the organisational shake-up at Transnet is part of ongoing efforts to reposition and transform state-owned enterprises so that they can be profitable, sustainable and competitive and can play a developmental role.
He said at the same time, Transnet will remain the sole shareholder of the subsidiary to prevent any negative impact on the group’s balance sheet.
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