Sibanye Mulls Solar Plant to Combat Eskom’s Rising Prices

Sibanye Gold Ltd. (SGL), the South African miner spun off by Gold Fields Ltd. this year, may build a 10-megawatt solar power plant to counter rising electricity costs, according to Chief Executive Officer Neal Froneman.

“If electricity is going to become such a big part of our cost base, we have to look at putting in energy sources ourselves,” Froneman said in an interview at a mining conference in Johannesburg today. “We’ve got the space and South Africa has plenty of sunshine. It’s very viable and we’re doing a lot of work on it.”

Sibanye’s electricity costs have risen 60 percent since 2007, even as the gold mining company used 16 percent less power, Froneman said during a presentation at the conference. Eskom Holdings SOC Ltd., the state-run electricity company supplying 95 percent of South Africa’s power, raised prices 8 percent this year, half of the increase it had sought from the regulator.

A further power-price increase of about 10 percent would be rejected by the mining industry, which will seek to get its energy from other sources, Froneman said.

“We’re just at the point where the cost of photovoltaic cells now starts crossing over with the cost of electricity from Eskom,” he said. “There will come a time when we can do it cheaper.”

To contact the reporter on this story: Kevin Crowley in Johannesburg at kcrowley1@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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