Mining Sector Demands Electricity Tariff Cuts

The mining sector is calling on the government to cut electricity tariffs, warning that high power costs and frequent outages are reducing production and squeezing profits.

The “State of the Mining Industry Survey” found that 90% of respondents consider the standard electricity tariff of USc14.21 per kilowatt hour uncompetitive, making Zimbabwe one of the region’s most expensive mining jurisdictions.

Ferrochrome producers benefit from a special tariff of about USc8/kWh, which is considered reasonable, but power still accounts for 40% of their earnings, and around 12% for other mining operations. Costs can surge above USc30/kWh when diesel generators are used during outages. Reads the report:

“Analysis of tariff proposals shows that the average tariff tolerance level for the mining industry is around USc10/kWh.

“Approximately 75% of mining executives indicated that they would accommodate a tariff of less than USc10/kWh, while 25% indicated that they would tolerate a tariff of above USc10/kWh but not exceeding USc13/kWh.”

Mining executives have recommended capping electricity tariffs at USc10/kWh, with three-quarters of industry leaders warning they cannot sustain operations above this level. The remaining 25% said they could accept up to USc13/kWh, but no higher.

They also criticised the unreliable power supply, citing unscheduled outages that halt production.

Beyond electricity, the report highlights infrastructure challenges, including deteriorating rail and road networks, water shortages, and inadequate transmission capacity, all of which undermine efficiency and threaten the long-term viability of the sector.

To stabilise operations, the industry proposed urgent policy measures: prioritising mining companies in power allocation, offering incentives such as tax breaks to boost investment in Independent Power Projects (IPPs), and freeing mines from long-term ZESA contracts to access private power.

Executives called on the Zimbabwe Energy Regulatory Authority (ZERA) to fast-track licensing for IPPs and resolve electricity wheeling bottlenecks.

They also urged ZESA to lower wheeling charges, import cheaper electricity, and rehabilitate ageing transmission infrastructure to support grid expansion and future growth.

More: Business Times