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The Power of the Mine - A Transformative Opportunity for Sub Saharan Africa

World Bank

A Potential Game Changer for Sub-Saharan Africa

Africa is blessed with energy resources yet they go largely untapped. As a result, only one in three Africans has access to energy, which stymies economic growth on the continent and seriously limits human potential and well-being. If nothing changes, Sub-Saharan Africa as a region will actually see the number of people without electricity increase from 590 million in 2013 to 655 million by 2030.

Against this backdrop, The Power of the Mine: A Transformative Opportunity for Sub-Saharan Africa, tackles a fairly new area of inquiry on the energy front: how can an energy-intensive, high-volume customer like the mining industry improve its contribution to energy supply, help expand access, and attract private capital into the space? The report shows that the mining industry in Sub-Saharan Africa has been sourcing power in innovative ways—some involving national utilities and some not. The self-supply arrangement imposes a loss for everyone—people, utilities, mines, and national economies. Since 2000, mines in Africa have spent around $15.3 billion to cover their own electricity investment and operating costs and have installed 1,590 megawatts of generating capacity. None of this power made it onto a national grid. Irrespective of the country—ranging from areas where a grid barely exists, forcing mines to secure their own generation, to those with large, integrated grid systems—there is great potential for the mining industry to be used as an “anchor customer” to unlock energy resources for the sustainable development of the power sector.

While the economic and business case for power–mining integration is strong, the report shows that this opportunity has largely been undeveloped. In some countries, integration could help connect many customers to mini-grids or national grids. In others, it has a facilitating role to support the power sector through greater mobilization of revenues from energy sales. The report also points to the challenges that must be overcome in this new and—in a developing country context—relatively unchartered area. But these are not insurmountable, and many countries that have integrated mining demand successfully in their power sectors offer proof that this untapped potential can be harnessed for national development.

 African policymakers can put in place the risk-mitigation mechanisms to create an operating environment where innovative power–mining arrangements can thrive. And the World Bank Group can use its convening power to generate a dialogue around the topic, share knowledge, and provide an array of financial instruments to achieve transformational impact. Through this report, we seek to highlight not only the challenges facing energy sector development in Sub-Saharan Africa, but also the new emerging opportunities to overcome them for a better future for all.

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Category: Energy

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