The Economic Impact of Electricity Price Increases on ... - Eskom

% change in real electricity prices
<strong>The</strong> results suggest that electricity intensity in itself is not a good
predictor <strong>of</strong> ‘pr<strong>of</strong>it vulnerability’, some relatively low-intensity industries
such as paper and wood products have slim pr<strong>of</strong>it margins and on this
basis are vulnerable to price increases
Mining sector pr<strong>of</strong>it vulnerability to real price <strong>Increases</strong>
% increase in Real <strong>Electricity</strong> <strong>Price</strong>s
450
400
350
300
250
200
150
100
50
0
500
450
400
350
300
250
200
150
100
50
0
10 10 10 10 10 10 20 30 40 50
90
150 150 150 150 150
Low electricity intensive manufacturing pr<strong>of</strong>it vulnerability
10 10 20 20
150
200
Source: (Conningarth Economists, 2011)
250
200 200
350 350
250
450
400
<strong>Impact</strong> <strong>of</strong> rising
electricity prices on
different sectors
Results
• Within the mining sector,
gold, platinum, iron ore,
silver, magnetite and
asbestos mining are the
most vulnerable to electricity
price increases
• Manganese and coal mining
emerge as the least
sensitive to electricity price
increases and at 2006 levels
<strong>of</strong> pr<strong>of</strong>itability could have
absorbed real electricity
price increases in excess <strong>of</strong>
200%
• Among the manufacturing
industries with a relatively
low electricity intensity,
paper and wood products
and printing and publishing
appear to be the most
vulnerable to price
increases, presumably
because rising electricity
prices would only put further
pressure on their already
slim pr<strong>of</strong>it margins
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