Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Sibanye Gold is looking at ditching South Africa’s biggest electricity provider in favour of the sun.
In response to rising electricity costs, the company says it’s considering building a 10-megawatt solar power plant, CEO Neal Froneman told Bloomberg.
Since 2007, the firm’s power costs have risen 60%, even as operations began using less power. Eskom Holdings, South Africa’s state-run electricity provider, hiked prices by 8% this year alone.
“If electricity is going to become such a big part of our cost base, we have to look at putting in energy sources ourselves,” Froneman told Bloomberg. “We’ve got the space and South Africa has plenty of sunshine. It’s very viable and we’re doing a lot of work on it.”
In its 2012 financial report, Sibanye cited the rising cost of power as a major contributor to its operating cost increase of 10%.
In March, the National Energy Regulator allowed Eskom to raise tariffs by 8% for each of the next five years. The utility company wanted a 16% hike.
Sibanye would not be the first mining company to consider the transition to renewable energy. Last year, the world’s biggest iron ore producer Vale SA announced that it would invest $315 million in two wind farms.
4 Comments
Gary
Probably be selling electricity back to ESKOM in the near future if this goes ahead.
allritejack
How are they going to store 10 MW of power to run the night shift? Or will that still be Eskom?
Koos
Great Start for Sibanye. At least someone is starting to make changes. A lot of people can take this news in consideration and start planning to do the same. I bet ESKOM will still be in play whilst running on Solar power, but all of us know Solar is the way to go with regards to these ridiculously increases in electricity costs. WELL DONE is what i say !
prawn
Probably doing a Hybrid system. Interested, Want to know more contact me [email protected]. We design and install them.