In a recent sector briefing, KPMG International examined how
mining companies can leverage sustainable development to tackle
resource constraints and socio-political challenges in remote areas
in the world. To provide context, the sector briefing contained a
series of case studies, providing unique insights from KPMG's
work with companies in key mining countries. Here we deal with
The mining sector is a powerful enabler for sustainable
development and has the potential to improve the performance of the
local economy. By adopting sustainable practices, mining companies
can gain competitive advantage, increase their market share, and
improve shareholder value through the early detection of business
In South Africa the importance of energy in mining can be seen
from the three inter-related perspectives of security of supply,
cost, and environmental impacts – which are directly related
to the government ́s strategic themes of growth, performance,
and compliance. Managing the links between industry trends and
strategic themes calls for an integrated approach that is suited to
this complex operating environment.
Investment in energy infrastructure
More than a decade of under-investment in the energy
infrastructure has severely undermined the security of the energy
supply in South Africa. In 2008, rolling blackouts and
interruptions brought energy efficiency and captive power
generation to the top of many corporate agendas.
The government's US$62 billion infrastructure investment
programme, which is aimed to alleviate shortages, is estimated to
increase average annual electricity prices by over 25% from 2010 to
2013. Furthermore, increasing energy prices are being compounded by
rising costs of labour and raw materials.
Securing a sustainable energy future is inextricably linked to
managing carbon emissions, where mining companies are expected to
play a key role in meeting the South African government's
emissions reduction target of 34% by 2020 relative to business as
usual. This goal is expected to be put into operation through a
proposed carbon tax, which is expected to be implemented in
mid-2012 and will have a material affect on the cost of
A low-cost, sustainable energy supply is critical
There are concerns that a carbon tax would make South
Africa's export coal industry unprofitable which in turn will
adversely impact employment in the country. Major coal producers
are requesting an alternative approach to a carbon tax.
These measures include government to provide incentives to steel
producers to develop technologies to improve efficiencies standards
setting and carbon trading. The transition to a low-cost,
sustainable energy supply is fundamentally linked to the future of
mining in South Africa, and it's critical for mining companies
to understand how the management of resource and social issues can
impact business operations and ultimately long-term
In cases where energy is available, managing costs is critical
to retaining competitive advantage in a tough operating
environment. These aims cannot be achieved at the expense of
unchecked rises in carbon emissions, which is now as much a matter
of compliance as it is of performance.
Mining companies must begin to work strategically with national
and local governments as well as with local communities to discuss
issues and potential conflicts concerning energy security, water
availability, economic development, and environmental impacts.
Mining companies need to be able to design risk management
programmes and productivity plans that are linked to sustainable
development in order to play the role of strategic partner.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Honourable Minister of Mineral Resources, Ms Susan Shabangu, reinforced during her 2012 budget speech on 10 May 2012, amongst other things, that the Department of Mineral Resources (DMR) remains determined to continue issuing stoppage notices in terms of section 54 of the Mine Health and Safety Act, No. 29 of 1996 (MHSA) to ensure compliance with the MHSA.
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