For 2024, Eskom’s electricity availability factor averaged 60.1%, a notable improvement from an average of 55% a year earlier. Photo: File
The Minerals Council sees ongoing stability in electricity availability from Eskom as a boon for economic growth this year, with the absence of load-shedding for more than 200 days projected to help South Africa’s GDP claw up to an upper threshold of 2% this year.
The energy intensive mining sector is a bigger export earner for South Africa in addition to its large employment capacity. Prior to the government of national unity (GNU) last year, miners had suffered production losses under the weight of loadshedding.
Andre Lourens, an economist with the Minerals Council, said on Friday that “the improved electricity availability in South Africa is a positive development for economic activity” this year.
For 2024, Eskom’s electricity availability factor averaged 60.1%, a notable improvement from an average of 55% a year earlier. However, during the first two weeks of this month, the electricity availability factor declined to 57%.
Nonetheless, the Minerals Council “anticipate that the sustained absence of power cuts will be an important factor behind faster domestic real GDP growth” in 2025.
“Growth of 1.5% to 2% is pencilled in for 2025, up from a projected less than 1% in 2024. We are optimistic that electricity availability is no longer a binding constraint on mining activity,” said Lourens.
Although electricity availability has improved, providing impetus to the mining industry, “the affordability of electricity is now taking centre stage, affecting the competitiveness and profitability of the mining sector” for South Africa.
S&P Global Ratings said on Friday that “progress in addressing the energy constraints in South Africa and a pick-up in private investment will support economic growth” in 2025.
Moreover, “planned economic reforms under the GNU, which largely focus on addressing infrastructure deficits particularly in the railway, ports, energy, and water sectors” were seen creating further opportunities for growth and investment.
“The private sector pipeline of 22 500 MW of energy generation projects is nearly R400 billion over the medium term. This will also be supported by the decrease in interest rates,” it said.
Apart from the improved electricity availability factor, South African coal and iron ore miners could benefit from normalised service and capacity from Transnet rail and port operations while gold prices will likely remain elevated given an uncertain global economic framework, say analysts.
South Africa is a key producer of manganese, coal, gold, platinum group metals and copper among other minerals.
However, SA miners have been facing turbulence, mainly centered around elevated costs and logistical hurdles, some that had forced ArcelorMittal South Africa to shut down its longs steel business units.
Bruce Williamson, a mining analyst at Integral Asset Management, said recently that some South Africa miners will receive a boost from improved port and rail services. Due to sluggish port and rail performance, ore stockpiles have been ballooning at mining sites.
“SA coal miners, as with iron ore will do well IF Transnet and Portnet could get back to normal (while) Mozambique (Maputo port) politics is also a swing factor,” said Williamson.
However, global supply chain disruptions, international trade policy complexities following the election of Donald Trump as US President last year and cost pressures are all seen weighing down prospects for major mineral exporters.
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