South African Miner Sibanye Gold Plans to Source Solar Off-Grid Power Supply

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--State-owned power utilities have a habit of becoming self-righteous and arrogant in the face of adversities of their own making. This was certainly true of South Africa's Eskom (Sunninghill), as it spun its way through blackouts and maintenance failures in a heavy, ill-digested soup of business school short-course clichés.

But now, by force of necessity and the dark days and nights of rolling blackouts and load-shedding, the energy supply scene is beginning to transform. The success of the independent power producers' (IPPs) renewables build program, and the imminent announcement from regulators of quotas for IPP-developed, gas-fed cogeneration plants, are positive signs for the short and medium terms. They fill the power supply gap amid the long-term desire to add 9,600 megawatts (MW) of nuclear generation.

The Afrikaans phrase "n boer maak 'n plan" is a fundamental part of the overall South African character and everyday lexicon. Literally translated, it means "a farmer will make a plan," but the real sense is that, "when the going gets tight, we'll think of an ingenious and practical solution, thinking on our feet," pre-dating MacGyver.

Major gold miner Sibanye Gold (NYSE:SBGL) (Johannesburg, South Africa), under Chief Executive Officer Neal Froneman, has reduced its electrical power consumption by about 20% since 2007. Power costs had mounted to 9% (about $70 million) of its operating costs and now stand at 20%. In 2014, power costs stood at about $245 million. With labor costs accounting for 55% of total outgoings, this put 75% of operating costs beyond the company's control.

Looking at this situation and faced with a continuing power supply shortage from Eskom, Sibanye plans to initiate the construction of its own 150-MW solar power plant at a site near Driefontein, to be brought online with the first 50 MW in 2017.

The plant would not meet Sibanye's 500-MW demand, but the company has undertaken an in-depth investigation into the feasibility of coal-fired power stations in the 200-MW to 600-MW range. Planning to become fully independent of the national grid, the company is discussing prospects with IPPs.

With South Africa holding massive and varied mineral resources, it is frustrating that the national power utility has to request large mining and industrial users to restrain their demand for power. More companies will be taking power-sourcing into their own hands.

For related information, see May 21, 2014, article -South Africa's Solar Energy Atlas Supports 9,600 Megawatt Build Program.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.