Urgently seeking ways to overcome reliance on the power grid in the mining sector

By Pierre Bekker, Director at Quyn International Outsourcing

The mining industry in South Africa is a significant contributor to the country’s economy, employing over 450,000 people and accounting for 7.5% of the gross domestic product in 2022.  With operations valued at more than R 1 trillion and nearly 500 000 employees, mining activities consume a tremendous amount of energy. The mining sector is responsible for consuming about 14% of Eskom’s electricity production, which is becoming increasingly problematic for mining operations given the unreliability of South Africa’s power grid. With mining organisations currently desperately seeking freedom from grid reliance, there is now a total pipeline of  9 GW (gigawatts) of energy projects in solar, wind and gas, and in battery storage planned by the private sector. Of this, 7.5 GW is planned for the mining industry alone at a cost of more than R150 billion. Given the urgency of the crisis, the private and mining sector must ensure the necessary labour component and skills are readily available to set up operations rapidly and effectively. Here, a Temporary Employment Services (TES) provider can ensure that unnecessary delays are avoided and that projects are rolled out to actualisation, within budget.

Rising prices, deepening crisis

Not only is there an 18.65% electricity price hike looming this year, and a 12.74% increase the following year, but the power supply is becoming increasingly unreliable, with rolling blackouts becoming the norm. South Africa’s electricity crisis hits the mining sector particularly hard, given that processing, smelting, and refining plants need absolute energy certainty, particularly in mining activities that send employees underground to ensure they can safely return to the surface. Any further disruptions to or deterioration of the power grid could severely limit mining operations and expansion at a time when global commodity prices have peaked. It could also result in a loss of production when unforeseen supply outages occur at substations.

Cutting ties with Eskom

One of the most effective ways to ensure power security for mining and reduce reliance on the national grid would be to build renewable power production plants on-site to avoid productivity losses during blackouts and unnecessary risk to the health and safety of those underground. With 7.5 GW of such renewables projects planned by the mining sector at a cost of more than R150 billion, and the Minerals Council estimating that 3 GW needs to be completed by the end of 2024, there is little room for error or delay. But when planning, implementing, building, and running renewable power plant projects is not their core business, where can mining houses (and the rest of the private sector) turn to for assistance to ensure that project deadlines are not unduly delayed, and budgets are not overshot?

Start with a success-driven mindset

Mining companies can secure the completion of their much-needed alternative power projects by engaging with a TES provider, as early as possible. By involving a TES provider in the initial stages of a project, such as the conceptual stage, IPPs (Independent Power Producers) can reduce stress and improve outcomes by conducting a premortem analysis to assess, plan, and mitigate risks before project implementation. This approach ensures that the project begins with a success-driven mindset, rather than conducting a post-mortem analysis after project failure. During the initial stages of renewable energy projects, a TES partnership can be critical to expedite and scale up operations, efficiently managing the labour, skills, and human resources aspect of renewable energy projects, which is not the core competency of mining companies. TES providers can take charge of the entire recruitment and onboarding process, from identifying the required specialist skills to managing payroll, Human Resources (HR), and Industrial Relations (IR). By working with the right TES provider, the mining and private sectors can speed up the time-to-benefit in their renewable energy projects while complying with labour law and health and safety regulations.

An end-to-end project solution

Furthermore, the positive impact of such renewable energy projects on the economy and the communities in which mines operate will be immense, particularly in driving socio-economic development linked to sustainable ventures. This makes it essential for mining and private sector organisations to partner with TES providers that can handle every aspect of their project, including community stakeholder engagement, enterprise supplier development, skills, and labour force management. Partnering with a TES provider that has a national and international capability footprint can provide the mining sector with immeasurable benefits, including logistics, skills, and procurement support, as well as the TES partner’s investment in the project outcome. This makes a TES provider so much more than just a third-party provider, as they become an integral part of the project’s organisational structure, with the ability to drive best practices and promote stakeholder engagement and community inclusivity at every point.

Outsourcing success

The primary objective of a TES provider is to significantly enhance the success rate of renewable energy projects. These tend to have high failure rates ranging from 60 to 70%, due to a range of factors such as market challenges, regulatory delays, and adverse environmental impacts. By carefully selecting their TES partner and leveraging their expertise, mining companies can cover all aspects of the power project, effectively mitigate risk, and set themselves up for a successful outcome.

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