Electricity: it is something those living in Europe or the United States might take for granted. Across the African continent however, access to power is far from evident. According to the World Bank, of the 1.2 billion people globally who are not connected to the grid, 650 million live in sub-Saharan Africa. This means that two-thirds of the African population south of the Sahara is plummeted in darkness after the sun goes down.
The World Bank estimates that 6-7 Gigawatts (GW) need to be installed across the continent every year to achieve universal access to electricity by 2030. Currently, only 1 to 3 GW of electricity is installed annually. Not only are ordinary people affected by this, businesses – large power consumers such as the mining sector included – suffer too.
“The power gap in Africa is huge. It is truly an issue one has to look into urgently,” says Nigerian business owner Tonye Cole, co-founder of Nigerian energy conglomerate the Sahara Group. “If you get power right in Africa, than you have won.”
Paulo Scaroni, Deputy Chairman at the Rothschild Group, agrees with Cole. “Energy in Africa is one of the most important concerns today. Millions of people in sub-Saharan Africa do not have access to electricity,” he says. “The problem is that you can’t have development without power. One needs to solve this, also to grow the mining sector … and to create a more positive environment for investors.”
The mining and extractive sectors are the main industries that are expected to struggle if Africa doesn’t sort out its electricity situation. The World Bank says that the annual demand from the natural resource sector in Africa, now booming due to various new discoveries, is likely to triple between now and 2020, to 23,000 MW.
This situation leaves investors worried. “A big concern among them has to do with power,” said Credit Suisse mining analyst Justin Froneman during this year’s Mining Indaba. “There is a dire need to grow mining production across Africa, but this requires more energy. The question is where this power base will come from.”
One of the World Bank’s suggested solutions is for mining companies to start generating their own power and pump excess electricity back into the national grid or supply it to communities around them. “Power-mining integration can bring substantial cost savings to mines, electrification to communities and investment opportunities to the private sector,” says the World Bank’s Vice President for Africa Makhtar Diop. “But to be successful, we need governments, power utilities and mining companies to work together.”