EY Corporate Finance Africa’s research suggests that at a global policy level the commitment to reach carbon neutrality is growing — and that in SA an industry not previously associated with green practices may turn out to be a surprise leader in the shift to efficient energy.
The National Development Plan envisages that “by 2030, SA will have an energy sector that: provides reliable and efficient energy service at competitive rates; is socially equitable through expanded access to energy at affordable tariffs; and is environmentally sustainable through reduced emissions and pollution”.
The Integrated Resource Plan 2019 anticipates that SA’s emissions will peak, plateau and, from 2025, decline. It also recognises that the energy sector contributes close to 80% of SA's total greenhouse gas emissions, of which 50% are from electricity generation and liquid fuel production alone.
Reaching a net-zero future will therefore require a co-ordinated effort across all industries and a leveraging of all available technologies, while recognising that coal-generated power will stay an important part of our energy mix for the foreseeable future.
Act revised
EY published its “2020 Renewable Energy Country Attractiveness Index” in November. SA had slipped from 36 to 37, while a number of other jurisdictions in which the mining industry is a substantive contributor have improved rankings. But it’s not a lost cause for SA.
There has been much excitement in the mining sector since mineral & energy resources minister Gwede Mantashe released a revised schedule 2 to the Electricity Regulation Act on March 26 last year, allowing mining companies to generate their own power. The anticipation is that the bulk of this will be from renewable sources or capturing energy produced by beneficiation processes.
SA also announced in September that it would organise a procurement programme for 11,813MW of new power infrastructure, including 6,800MW of renewable energy to fill its short-term electricity supply gap.
A transition to a low-carbon economy is giving the mining industry a licence to think about taking its business into the future in a completely new way as well as contributing to the resolution of our energy crisis.
The obvious winners are the companies producing commodities that are integral to a lower-carbon future. Cobalt, copper, lithium, nickel, manganese, vanadium and many others are finding their niche applications in batteries and other components integral to the storage of renewable energy.
The more exciting development, however, is how mining companies around the world are now thinking about the other natural resources they have at their disposal.
In SA, mining companies need to leverage the energy resources available to them to reduce their reliance on Eskom and their exposure to the associated rapidly escalating energy costs. They also need to generate renewable energy to reduce their carbon footprint. These renewable energy resources should endure beyond the life of their mining operations to enhance the sustainability of the communities that surround them.
In Australia, developers have tapped into the country’s sunshine, land and strong winds to build a new export economy. It has long been a net exporter of energy, with coal and gas equalling about two-thirds of production. As its energy sector transitions to a low-carbon future, it also seeks to become a renewable energy export superpower.
Creating ‘energy mines’
Could SA’s mining companies play a part in turning some of the vast tracts of empty land around mining operations into new “energy mines” that generate the electricity needed to power our continent? Based on the World Bank Group's research, SA has better energy-intensity characteristics in both solar and wind potential than Australia.
If our mining industry could replicate some of the initiatives in Australia, it could produce similar power outputs to the electricity generated by SA's newest coal-fired builds, at similar costs, which can be exported as far as Kinshasa and the Copperbelt.
That would be a legacy that would endure and change millions of lives for the better.
• Du Toit is EY Corporate Finance Africa leader
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