JOHANNESBURG – South Africa’s mining directors did not act fast enough in response to the country’s energy challenges. That’s according to Thomas Garner, CEO of Cennergi, an independent power producer.
Participating in a panel discussion about the energy crisis and changing energy mix at the Joburg Indaba, Garner said the stability of the country’s electricity supply had been flagged as a risk since the mid-2000s: “We predicted that electricity prices would treble and no one believed us”. At that stage, electricity was never listed as a massive risk or even one of the top five risks to industrialisation in South Africa due to Eskom’s reliability and the fact that it was cheap to buy electricity from the utility, he said. And this, according to him, raises questions as to how directors with fiduciary responsibilities make decisions.
But fellow panelist and energy thought leader Mike Rossouw said the fact that “nobody knows what energy demand is going to be in the future” has profound implications for investing in growth. Calling for increased transparency, he said not being able to predict the price of energy is the biggest challenge to the mining industry. However, unlike traditional energy forms, renewable energy prices can be predicted.
“Traditional energy demand as we know it, will fall away,” said panelist Brian Dames (the previous CEO of Eskom) who is now CEO of African Rainbow Energy & Power. According to him, further investment is needed in technologies that will render alternative supply, but this investment is threatened by the possibility of lower returns for investors. Dames called on government to “Please set policies that allow for investment in no-regret options… demand-side management is a no-brainer, renewables is a no-brainer”.
But Maduna Ngobeni, who also participated in the panel on behalf of the Department of Energy, where he is Deputy Director said: “We can never be 100% spot-on from a policy point of view because things are always changing”. Instead, he said the current electricity challenges present perfect opportunities: “These are opportunities that we shouldn’t undermine and opportunities that will change the electricity sector forever”.
Garner, however said “Eskom as a utility cannot continue to exist because the world is changing”. That “government isn’t on the same page in different departments”, is leading to slow decision making and lost time and lost money.
Dames suggested mining companies exploit this and ask themselves how they can fundamentally transform as an industry in order to produce something new that is of value, perhaps even in the renewables space.