JOHANNESBURG – Mining lobby group the Minerals Council South Africa has warned that the industry could lose 150 000 jobs if the National Electricity Regulator of South Africa granted Eskom the 15 percent annual tariff hike for three years under the fourth Multi-Year Price Determination.
The council’s chief economist, Henk Langenhoven, said yesterday that the increase would signal a tipping point for the mining industry and the economy.
Langenhoven said it would also hasten the demise of the gold mining industry, where 61 367 employees were working at marginal or loss-making mines.
He said it would also push down production to 20 tons from the current level of 140 tons a year.
“The proposed tariff increases will virtually eliminate the entire gold mining industry,” Langenhoven said.
The impact would similarly be severely felt in the platinum mining industry, where 37 900 jobs would be terminated, Langenhoven said.
“The impact on other commodities could bring the total mining employment job losses to as high as 150 000,” he said.
The embattled power utility, which is on the brink of a financial meltdown, this month applied for a 15 percent tariff increase for three years to contain debt that has crippled its operations.
Its balance sheet has seen debt ballooning to more than R419 billion.
The Energy Intensive Users Group also slammed Eskom’s request, charging that its business model needed to be revisited.
The council pointed out that the volatile price environment had already seen the jobs bloodbath heightening.
Last year, Impala Platinum, Gold Fields and Lonmin announced plans to cut plans.
The council said higher power prices had made the industry less competitive with manganese smelters hurting most.
Chief executive Roger Baxter said the council was concerned that Eskom had already received a 4.4 percent regulatory clearing discount approval.