POLIC Y ENVIRONMENT S tr a t egic Goal 2 T he Miner als C ouncil acts t o cr ea t e an enabling polic y en vir onment f or the mining sect or engaging with all s tak eholders on all policies tha t impact the sect or t o ensur e tha t the y ar e s table c ompetitiv e and pr edictable in or der t o pr omot e in v es tment and tr ansf orma tion It is the Miner als C ouncil s aim t o de v elop a clear vie w of wha t a suc c es sful South A frican mining polic y should look lik e and the k e y principles underpinning such a polic y W e engaged polic y mak ers on v arious ec onomic is sues such as on the c ountry s macr oec onomic policies and the pr ogr es siv ely w orsening ener gy crisis and logis tics r ail and harbour capacity EC ONOMIC TRANSFORMA TION E c onomic engagement During 20 19 the Miner als C ouncil w as in v olv ed in r esear ch and engaged polic y mak ers on v arious ec onomic is sues K e y among these engagements w er e those r ela t ed t o the macr oec onomic policies of the c ountry and the pr ogr es siv ely w orsening ener gy crisis and logis tics capacity T he Miner als C ouncil participa t ed in se v er al ses sions of BUS A s E c onomic P olic y main c ommitt ee and subc ommitt ees on Ener gy and T r ansport and L ogis tics on these subjects T he Na tional T r easury published a document entitled E c onomic tr ansf orma tion inclusiv e gr o wth and c ompetitiv enes s t o w ar ds an ec onomic s tr a t egy f or South A frica which w as w elc omed and s tr ongly support ed T he f ocus on wha t it called the netw ork indus tries is of particular importanc e t o the mining sect or as tr ansport and logis tics is one of the lar ges t input c os ts f or mining and infuenc es pr oftability T he document c ontained pr actical r ec ommenda tions which w er e support ed b y the Miner als C ouncil and included the sale of Esk om s c oal po w er plants t o priv a t e pla y ers in or der t o signifcantly r educ e the po w er utility s debt s t ock of o v er R450 billion T his mo v e w ould also bring r elief t o the fscus as mos t of Esk om s debt is guar ant eed b y the South A frican go v ernment T he Miner als C ouncil made a submis sion t o the Na tional T r easury r aising its support f or the r ec ommenda tions c ontained in the document T her e w as much f ocus during the y ear on the det erior a ting security of ener gy T he DMRE published its Int egr a t ed R esour c e Plan t o w ar ds the end of 20 19 IRP 20 19 T he Miner als C ouncil cautioned tha t the document under es tima t ed lo w er futur e electricity demand due t o det erior a ting ec onomic gr o wth and the declining electricity int ensity of the ec onom y the damage tha t an unr ealis tic tarif tr aject ory c ould infict on the ec onom y and the r apidly det erior a ting r eliability of Esk om s po w erplants T he f u t u r e mark et s tructur e and mix o f electricity supply t echnologies w er e not sufciently c onsider ed and the risks t o ne w t echnologies w er e under es tima t ed T hese dynamics and nega tiv e c onsequenc es s tart ed t o pla y out during 20 19 T he IRP 20 19 has serious r amifca tions f or the c oal indus try pos t 20 30 as it points t o signifcant declines in c oal c onsumption b y Esk om fr om appr o xima t ely 115Mt in 20 18 t o about 50Mt in 2040 R esis tanc e t o Esk om s unr ealis tic tarif applica tion 15 each f or 3 y e a r s f o r the Multi Y ear Pric e Det ermina tion 4 MYPD4 and further R egula t ed Clearing A c c ount to NERS A in No v ember 20 18 r esult ed in signifcantly r educ ed incr eases of 9 4 20 19 20 8 1 20 20 21 and 52 20 21 22 announc ed in F ebruary 20 19 T his w as a gr ea t r elief f or the mining sect or but the c onc erns about a further subs tantial R egula t ory Clearing A c c ount RCA applica tion t o NERS A ma t erialised in A ugus t 20 19 equa ting t o R2 7 3 billion w h i c h if appr o v ed w ould nullify the lo w er appr o v ed tarif incr eases t o within 6 of the original MYPD4 applica tion Pr epar a tions w er e ongoing t o r esis t this during 20 19 T he Department of Public Ent erprises DPE published the R oadmap f or Esk om in a r ef ormed electricity supply indus try on 29 Oct ober 20 19 It c orr ectly diagnosed the v ertically int egr a t ed s tructur e of Esk om as being unsuitable and sugges t ed a phased s tructur al r ef orm pr oc es s t o cr ea t e thr ee ne w entities gener a tion tr ansmis sion and dis tribution T he Miner als C ouncil agr eed with the sugges t ed change in the electricity supply indus try but w arned P age 66