Monday, April 27, 2015

Sub-Sahara: A Case for Cautious Optimism

Africa’s notable economic growth story is generating excitement among global investors. The continent that has long been identified with stagnation, poverty and elevated risk is now catching the eyes of entities looking for a fertile land to grow their businesses on. According to a document, titled “Africa at a Crossroads”, produced by the Center for Strategic and International Studies, Sub-Saharan economies are expected to achieve growth rates of more than six per cent in the next decade, surpassing the estimated average of any other region in the world.

The onus is now on the Sub-Saharan economies to capitalize on the economic growth at hand. Experts unanimously say that the foremost factor that can further accelerate the growth of the region’s economy is infrastructure development. If the regional economy aims to compete with the established and stable markets of other regions, it will need access to reliable and sustainable energy supply, and dependable communications and transportation lines that would allow for smooth and cost-efficient movement of goods and services.

Bringing power to the mining sector

The mining industry is a key contributor to the growth of the Sub-Saharan economy. One of the foremost economic drivers of most of the region’s countries, the industry has the potential to attract a significant number of foreign investors, largely owing to the huge amount of resources naturally available in Sub-Saharan countries.

After the large-scale energy shortage in South Africa in 2008, the region’s mining sector was compelled to make inroads into self-sufficiency. With the introduction of South Africa’s Renewable Energy Independent Power Producer Procurement Program and other similar programs in other countries, and the growing popularity and availability of wind turbines and solar panels, mining companies gradually embraced alternative energy generation facilities to support their electricity requirements.

The initiatives of African mining companies to establish local power generation systems are laudable. Wind, solar and thermal energy facilities, however, may encounter operational challenges that may cause its production to recede in certain instances. Without the primary sources of energy, the output of the plants may not be sufficient to supply for the mining operation’s electricity needs. The effects of these predicaments to the productivity of the sites may result in huge losses for the companies that have heavily invested in the facilities.

In times when both the permanent large-scale and the local energy supplies are unreliable, mining companies may find merit in tapping the potential of rental power plants. Temporary power plants are capable of providing a viable supply of energy in times when existing electricity generation facilities are challenged by overwhelming demand. Rental generator sets represent supplemental electrical energy sources while the permanent power generation facilities are being constructed, repaired or maintained. Temporary energy systems are cost-effective alternative solutions to seasonal energy insufficiency, as mining or utility companies will not need to shell out a sizable initial investment to have them running, as opposed to building permanent power plants that will only be used sparingly.

Owing to the flexibility of its core technology, rental power plants are able to provide electricity as required by the users. This feature allows customers to ramp up or scale down the supply of power as needed. Due to their modularity, temporary power stations can be transported from a yard wherever in the world to practically anywhere. This attribute can be of particular interest to mining companies, as their operations are usually located in remote areas. By virtue of their plug-and-play configuration, interim power plants can be installed and turned on in a matter of days. During times of interrupted production or emergency cases, rental power stations can immediately restore electricity without considerable latency.

Power is within reach

Investors in the mining industry describe the present situation of the sector as “full of cautious optimism”. They are optimistic because despite present energy issues in the industry, mining companies are determined and willing to surmount the impediments to the growth of the industry. On the other hand, investors are not letting their guards down as they would want to see the will of the industry converted into practical programs.

The mining industry plays a major role in the development and growth of the Sub-Saharan economy. To further encourage the development of the regional economy, the industry needs to resolve energy-related problems that are still hounding its operations. The solutions currently on offer give the industry the power to translate their determination to tangible, sustainable electrification programs that may restore the full confidence of transformative investors throughout the world.

*This article was originally published in the April 2015 issue of African Review magazine, published by Alain Charles Publishing.*


Robert Bagatsing
Altaaqa Global
Tel: +971 56 1749505

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