• SA’s GDP is predicted to suffer a 2% deficit
  • Mining companies have downgraded their growth prospects for FY2023
  •  Delta’s operations in South Africa were dampened by the recurrent blackouts

Harare- Ailing power utility, ESKOM has recommenced Stage 6 load-shedding from Stage 4 as power supply by the state-run parastatal remains clouded, Eskom’s Chief Executive Officer (CEO), Andre Oberholzer revealed on Sunday. Continued load-shedding is hobbling the mining industry immensely, manufacturing industry, and small businesses thus, jeopardising the economy's growth. South Africa's GDP is estimated to ease 2% due to reccurent power cuts.  South African bank, Nedbank estimates that GDP could be two percentage points higher in the absence of the electricity constraints.

The South African Reserve Bank slashed its 2023 growth forecast for South Africa to 0.3% from the previous 1.1% due to extensive and damaging load shedding. The bank also cut growth expectations to 0.7% in 2024 (down from 1.4%) and to 1.0% in 2025 (down from 1.5%)

Stage 6 load shedding means that 5000 MW to 6000 MW of power must be shed to prevent the national grid from collapsing, hence, South Africans have to brace for more hours of darkness.

“So, looking at it, stage 6 load shedding will remain implemented until sufficient generation units are returned to service, ending load shedding at those levels have been replenished, Oberholzer said. 

“We are not yet able to make a firm commitment as to when we will be able to ease the current stage of load shedding.”

Zimbabwe’s ZSE-listed largest company by market capitalisation, Delta Corporation reported stagnant volumes at United National Breweries South Africa for the third quarter ended 31 December 2022 courtesy of reduced power supply.

Blackouts in South Africa, just like in Zimbabwe are hitting hard on the mining sector, one of the key contributors to national GDP and employment. 

South Africa’s economic ailing gives a big blow to Zimbabwe. A crippled Zimbabwean manufacturing industry means the nation has to embark more on imports from its largest trading partner, South Africa. 

The mining industry employs about 460 000 people and adds almost R500 billion to South Africa’s GDP. Minerals Council South Africa’s Christian Teffo revealed that rolling blackouts have damaged mining infrastructure, which had resulted in the loss of millions of rands and threatened the safety of 2 000 miners.

Data from Statistics South Africa, the national statistical service showed that mining production decelerated for the tenth consecutive month in November due to blackouts while GDP is expected to decline by 2% courtesy of load-shedding. 

Mining Review Africa reported that platinum will be in a deficit position this year, partly because of load-shedding and according to Khanyisile Moshoeshoe, the resources sector lead at Rand Merchant Bank, mining giants including Anglo American Platinum, Impala Platinum, Sibanye-Stillwater and Royal Bafokeng Platinum have attributed their production underperformance, in part, to Eskom-related power cuts.

Eskom suffers a debt of R392 billion and to cover its debt, the National Energy Regulator of South Africa granted Eskom an 18.65% tariff hike. The increase will come into effect on 1 April 2023 for Eskom consumers, with a similar rise in electricity costs most likely coming into effect for municipal consumers in July.

One of the immediate solutions to shy blackouts in South Africa is to auction off power plants to private companies and allow them to compete to offer power. A profit motive would result in better performance. However, privatising power plants seem to be unpopular as the government is not willing to do so. 

Privatisation would lower the high levels of corruption currently haunting the South African energy sector according to the Zondo Commission’s reports.

Eskom has 45,000 megawatts of baseload in coal, enough to run the country, but power plants are poorly run and maintained due to corruption and mismanagement of funds. 

Both, ESKOM and its sister company ZESA are failing to produce sufficient power due to heavy reliance on ageing power plants and corruption. 

To offset disappointments, there is a need for companies to invest more in solar projects. Recently, Blanket Mine, a Caledonia Corporation-owned outfit commissioned a 12MW solar plant which is meeting 27% of the mine’s power needs, thus, increasing efficacy. 

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