SA competitiveness may be eroded by power costs

According to Mining Weekly, Energy Intensive User Group chairperson Mike Rossouw said that South Africa's international competitiveness will increasingly be eroded by the rapid rate at which the domestic electricity price is rising.

Rossouw was speaking at the Africa Energy Indaba in Sandton. Electricity prices were steadily and understandably increasing across the world, Rossouw said, warning that the rapid rate of increase in South Africa's electricity tariffs was not sustainable. "We have already seen a number of large firms close their doors and relocating operations elsewhere."

"South Africa's economy was historically, and still is today, driven primarily by the mining sector, accounting for about 22% of the gross domestic product. However, the trend is that miners and other energy-intensive manufacturers are closing their South African operations in favour of more economic destinations," Rossouw said. The mining sector also accounted for about 55% of direct foreign investment in the country. But the seven largest energy users, which accounted for about 10% of the country's total energy demand, were struggling to adjust to Eskom's fast-raising tariffs. Margins were being squeezed, while previously sustainable operations have become nonviable, Mining Weekly reports.

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