KEY POINTS
- South African miners are investing heavily in solar and wind power.
- Renewable energy is helping companies cut electricity costs and emissions.
- Eskom is expected to remain a key power supplier for years.
South Africa’s mining companies are rapidly increasing their investment in renewable energy as they seek to reduce dependence on the country’s state-owned electricity utility, Eskom, lower operating costs and meet increasingly demanding emissions-reduction targets.
The shift marks a significant change for an industry that has relied heavily on Eskom for decades. Mining companies are now developing solar and wind projects, signing power purchase agreements with independent producers and exploring alternative energy sources to improve the reliability and affordability of their electricity supply.
However, mining executives say Eskom is unlikely to disappear from the sector’s energy mix soon, as renewable sources remain intermittent and mines still require reliable baseload electricity.
South Africa continues to generate more than 80 per cent of its electricity from coal, while renewable sources account for roughly 10 per cent of power generation.
Eskom’s ageing coal-fired power stations have struggled at various times to meet national electricity demand, creating challenges for businesses and industries that depend on a stable power supply.
For mining companies, electricity is a major operating cost, particularly for energy-intensive gold, platinum, iron ore and coal operations. As a result, companies are increasingly looking beyond the national grid to secure additional power and control costs.
The move towards renewable energy is also being driven by corporate decarbonisation commitments, with miners under growing pressure to reduce greenhouse gas emissions.
Anglo American Expands Renewable Partnership
Anglo American is among the mining companies pursuing renewable energy through partnerships with independent power producers.
In 2022, Anglo American established a 50-50 joint venture with EDF power solutions, a subsidiary of French energy company EDF. The venture, known as Envusa Energy, supplies renewable electricity to Anglo American businesses including Kumba Iron Ore, De Beers and Valterra Platinum.
Envusa currently has 520 megawatts of renewable generation capacity, consisting of 280 MW of wind power and 240 MW of solar power.
The company says the existing capacity supplies about 30 per cent of the energy consumption of Anglo American’s mines.
Envusa has a project pipeline of about 1,500 MW and aims to increase its generation capacity to 3,000 MW by 2030, supplying Anglo American’s operations as well as other industrial customers.
Envusa CEO Nicole Mason said renewable power from wind and solar could be between 20 per cent and 30 per cent cheaper than conventional electricity, strengthening the financial case for the transition.
The company is also looking at additional wind projects and solar installations combined with battery storage, which could help address the intermittent nature of renewable generation.
Sibanye Stillwater is taking a different approach by securing renewable electricity through power supply agreements rather than investing directly in generation assets.
The company obtained about 99 per cent of the electricity required for its platinum group metals operations and 88 per cent of the electricity used by its gold operations from Eskom last year.
It has since contracted 835 MW of renewable energy capacity, although only 164 MW was operational at the time of the report.
Sibanye expects renewable energy to supply about 64 per cent of the total energy demand of its South African operations by the end of 2028.
Chief executive Richard Stewart said the strategy was designed not only to reduce carbon emissions and improve energy security but also to deliver financial benefits.
The company expects renewable electricity costs to be about 20 per cent to 30 per cent lower than projected Eskom tariffs.
Despite this transition, Stewart said Eskom would remain important for years because renewable energy cannot consistently provide electricity around the clock and battery storage technology is still developing.
The renewable energy push is not limited to companies focused on precious metals and iron ore. South Africa’s coal producers are also investing in renewable generation.
Exxaro Resources is expanding its renewable energy business through its subsidiary, Cennergi, which currently operates 297 MW of generation capacity and has a near-term development pipeline of 593 MW.
The company aims to reach 1,600 MW of net installed renewable capacity by 2030.
Exxaro is also targeting substantial reductions in its direct and purchased-energy emissions, with plans to cut Scope 1 and Scope 2 emissions by 40 per cent by 2030 and 70 per cent by 2040, before reaching carbon neutrality by 2050.
A 68 MW solar plant at Exxaro’s Grootegeluk coal mine has already reduced the mine’s dependence on the national grid by about 30 per cent.
The solar project is estimated to save the company around 100 million rand, or about $6.25 million, annually in electricity costs, while reducing its Scope 2 emissions by 22 per cent.
Cennergi also supplies electricity to Eskom and other industrial customers, allowing Exxaro to participate in the wider electricity market.
