South African mining companies will be hit with an additional R2 billion (£154.3 million) in expenses as a result of the Eskom tariff increase, it was claimed on Friday (26th June).

The National Energy Regulator of South Africa (Nesra) announced last week that it had rubber-stamped a 31.3 per cent increase in electricity prices, starting from 1st July.

Reflecting on the news, Dick Kruger, Techno-economics Assistant Advisor at the Chamber of Mines, expressed his belief that the hike will hurt the country's mining sector.

He said: "The challenge for the mining sector is that we have a basket of goods and services whose costs are rising at double-digit figures in an environment of low commodity prices.

"This means that a number of mining companies are battling for survival and extra costs add to the burden of the pressures they face in the short term."

Nesra also announced that the government's 2c/KWh environmental levy would be introduced as part of the tariff increase, which applies until 31st March 2010.

Mr Kruger added that he wants Eskom's detailed funding model and second multi-year price determination to be prepared for implementation by 1st April next year.

Until those processes have been completed, he continued, it would be tough to determine the true level of its operational costs and capital expenditure plans.

The state-run utility suffered major power outages in the early part of 2008 which badly affected production at South African mines.

Source:

Power price hike to cost SA mining sector extra R2bn (26/06/09)

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