Eskom and the carbon tax will flatten miners – and workers
Mining has absorbed a 523% increase in electricity prices since 2006 and jobs are bleeding as a result
Even the most cursory glance and briefest consideration of comments by Chris Griffith, CEO of the world’s largest platinum miner, should spark deep concern in the government.
Griffith, the boss of Anglo American Platinum (Amplats), spoke of electricity costs going up to R1bn a year within the next three years as Eskom implements its new tariffs, while the carbon tax that kicks in from June will add another R300m to its costs.
That’s just one company, albeit a large one that uses a lot of power – but by the same token it employs 25,000 people.
While Amplats is at the lower end of the SA platinum industry’s cost curve, and the industry has finally moved back to profit with higher metal prices, there is no chance that many of the recently unprofitable mines will withstand costs increases of this magnitude.
The mining industry has already absorbed a 523% increase in electricity prices since 2006 and the results are clear. The mining sector has bled jobs over the past decade, with about 54,000 jobs lost.
Even for Amplats, where does it find another R1.3bn to pay for a crisis not of its making?
When a CEO of a company the size and importance of Amplats delivers an unequivocal message of “don’t do it” on implementing what is perceived to be an unnecessary carbon tax – seeing as electricity-consuming industry is reeling under costs hikes and erratic supply – then someone in the government would do well to listen.
The numbers when it comes to additional costs that Eskom is imposing on the country combined with the carbon tax are scary. More scary will be the effect on unemployment, which it seems this government does not have an answer to address. If it doesn’t have an answer it might do a bit more listening and a little less rhetoric.