Minerals Council says no respite from energy cost inflation

SOUTH Africa’s mining sector is set for continued high energy inflation despite improved performance from state-owned entities, the Minerals Council said following the publication of the Medium-Term Budget Policy Statement on Wednesday.Finance minister Enoch Godongwana presented the budget statement, which projects a revenue shortfall of R15.7bn over the next two years.“Given the need to invest in transmission infrastructure, address the municipal debt and service delivery crisis, and the fact that the latest Integrated Resource Plan pivots to more expensive renewables, the South African economy will likely face a prolonged period of elevated electricity prices,” said Bongani Motsa, acting chief economist at the Minerals Council.The National Treasury mentioned in the MTBPS there had been improvements in Eskom’s electricity supply and Transnet’s operational performance. However, the mining sector still faced threats from high electricity tariffs and slow rail reforms, it saidThe mining sector, which employs around 468,000 people, contracted by 3% in the first half of the year. Electricity tariffs have increased on average more than 900% since 2008, whilst Transnet has failed to achieve 60% of its targets set to improve operational performance.“Until we see investment levels pick up and start improving the rail and electricity networks, we remain cautiously optimistic,” said Motsa.There was no mention in the MTBPS of a proposed chrome ore export tax in the statement, speculated to be 25%, despite government previously flagging it as a key intervention to revitalise the domestic ferrochrome sector.Nonetheless Minerals Council said any proposed tax was a bad idea as uncompetitive electricity costs, not chrome ore supply or pricing, were the key constraint for South African ferrochrome smelters. An export tax would be “misplaced and potentially damaging” to chrome miners employing more than 28,000 people if it forced China, South Africa’s largest chrome buyer, to find alternative sources, said Motsa.The post Minerals Council says no respite from energy cost inflation appeared first on Miningmx.Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com