FOOD FOR THOUGHT

Fuel prices increased once again on 2 November 2022. We have seen a large number of fuel price hikes during this year all of which have had an impact on driving up costs for homes and businesses. The mining industry is not excluded.

Transport costs would be the main focus of where the price hikes would be hitting the industry. The mining industry relies heavily on various transport mechanisms in order to move goods around the country and export them. However, the increase in Brent Crude oil that has led to escalating fuel costs has a negative overall impact on the industry.

The knock-on effect of rising petrol prices deals a strong blow to operation costs as fuel is needed for transport and operating equipment. This then has an effect on production and a rise in costs per ton – a cost that will be passed directly to the buyers.

This, again will have an effect on the cost of living as well as the South African – and global - economy.

The factors forcing these increases include the Rand – Dollar exchange which, at the time of writing, is standing at R17.29.The exchange, of course, means that South Africans pay more for Brendt Crude oil.

International fuel prices have also climbed, partly due to higher demand due to a low supply of diesel, and partly due to the Ukraine-Russia conflict.

Under the current circumstances, there doesn’t appear to be any relief where the fuel price is concerned, and certainly not in the near future. This is pushing the mining industry to consider alternative energy sources such wind and solar to power infrastructure. However, for now, the fuel costs remain a thorny issue when it comes to fuelling vehicles and equipment.