Mining companies know energy risk, having ploughed enormous capital into private generation, public-private partnerships (PPAs) and self-supply during a decade of loadshedding. 

The circumstances that drove those decisions have certainly eased, but financial exposure continues to sit in many contracts signed during the crisis years. And the ground beneath those contracts keeps shifting.

In 2026, State-owned utility Eskom’s direct-customer tariff rose 8.76%, with a further 8.83% increase approved for 2027. The structure of the bill itself is changing, with a growing share of every invoice fixed rather than usage-linked, undercutting the business case to “use less, pay less”. 

The energy line on an income statement has become considerably harder to predict than it was five years ago. But the real risk lies below the surface, in the obligations and drift that no one watches between board packs. 

We see this risk from both sides of the investment decision. With more than R2.5-billion invested across a portfolio of over 90 operating assets, questions about capital allocation, long-term performance and contractual exposure are ones we have to answer ourselves. That experience has made it clear that the quality of an energy investment is often determined by the questions asked before the contract is signed. 

For mining CFOs, these are the ones worth asking.

What will this cost me over 10 years, not just at commissioning?

A PPA is not a fixed number, but a set of obligations that recalculate every month over what is typically a 10-year term. Left unchecked, generation that underperforms against what was modelled at commissioning goes uncaught for years.

Margin leaks out a fraction of a per cent at a time, easy to write off until five or six years in, when someone finally adds it up and the number is too large to explain away. By then it is not a modelling error, but money that is gone. Across our more than 35 industrial energy deployments, we have recovered R600-million in verified value for clients by catching this drift before it reached that point.

What happens to my income statement if I do nothing?

Doing nothing does not feel like a decision, but that is precisely what makes it dangerous. No one signs off on the risk, so no one owns it until it is unavoidable. Meanwhile, tariffs keep rising on a schedule you do not control, and obligations accumulate.

We saw how much this matters on a R300-million ammonia cooling and heating plant we built and manage for Aspen Pharmacare in Gqeberha. The 20-year business case holds because every obligation has been tracked from day one. 

Can I see, in real time, what this investment is doing for me?

When a board member asks a direct question about energy cost or carbon exposure, and the answer is “we’ll get back to you”, that is a control problem, and boards are increasingly unforgiving of it. Many finance teams only see energy performance when an invoice lands or a report is due. This is a gap we built Syntiro, our financial control system for energy, to close: keeping the number honest between board meetings, not just producing one in time for them.

Will this investment survive SAWEM, or create a new gap?

The South African Wholesale Energy Market (SAWEM) will require large energy users to submit accurate daily demand forecasts or face financial penalties for getting it wrong. The market will charge you, immediately, for the gap between what you forecast and what you actually use. A new investment made now either has this built in from day one, or it is one more thing your team is scrambling to fix once the rules take effect. 

The questions do not stop there. 

If your team is trying to manage multi-billion-rand energy costs across Eskom, municipal suppliers, embedded PPAs and wheeling agreements in a spreadsheet, each with its own tariff structure, billing cycle and contractual terms, are you certain every tariff line on it is billed correctly? Can its carbon impact survive an audit next year, or will you be estimating it the week the disclosure is due? 

Energy used to be an engineering decision with a financial line item attached. For the companies asking these questions, it is now the reverse: a financial decision that happens to involve engineering. That shift, more than any market reform, is the one worth paying attention to.

These questions do have answers. Finding them before a signature goes on the page is what separates managing energy risk from simply inheriting it.

By Kurt Miller, the CFO and an Executive Director of Energy Partners Holdings. He is responsible for finance, legal, IT/ERP and investment management. He has focused on energy and infrastructure investment since joining Energy Partners.