ESG & Energy Transition in the Mining Sector
Government Needs to Work with South African Mining Sector to Lower Carbon Power Sources
With the election of a more climate-focused administration in the United States and the European Union (EU) honing in on the mining industry to reduce their carbon emissions, the South African government and mining industry must work together to effect the transition to a lower carbon future.
Government needs to cut the red tape to enable the South African mining sector to transition to lower carbon power sources
Mining is one of the most energy intensive industries in the world, responsible for up to 7% of global Green House Gas emissions, making it a target for global policymakers increasingly focused on regulating companies’ carbon neutrality and Environmental Social and Governance (ESG) performance.
With the local mining sector relying on coal-fuelled power supplied by Eskom, South Africa has been particularly slow in achieving emission reductions. Furthermore, current regulations and red tape continue to thwart progress on energy transition for the mining sector.
In October 2020, the Department of Mineral Resources and Energy (DMRE) and National Energy Regulator of South Africa (NERSA) confirmed that all grid-connected, on-site consumption self-generation projects above 1MW had been granted approval for deviation from the Integrated Resource Plan.
However, the licensing process for these projects is still not working quickly enough (only five licenses for projects above 1MW have been approved by NERSA since 2016) and the regulatory framework lags behind other countries.
To improve the regulatory process in South Africa and increase the uptake of on-site, lower carbon power generation in the mining sector, government can take some key actions.