Does Loadshedding Impact the Mining Sector in South Africa? A Time-Frequency Inquiry

Andrew Phiri

Economic Research Guardian, 2024, vol. 14, issue 2, 151-162

Abstract: The severity of rotational power outages in South Africa has heightened since 2019, impacting mining sector production. This study employs a unique 'unplanned capability loss factor' dataset to gauge power outage extent, investigating loadshedding's influence on mining equity returns from January 1, 2019, to September 1, 2022, using wavelet coherence analysis. Results show a pronounced negative leading impact of power outages on mining equity returns, particularly over extended cycles. This suggests that loadshedding undermines long-term informational market efficiency in the semi-strong sense, diminishing the appeal of South African mining stocks for global investors. Based on these conclusions, we recommend policymakers to heighten their urgency in addressing its electricity generating capacity problems.

Keywords: Loadshedding; Unplanned capability loss factor; Mining shares; South Africa (search for similar items in EconPapers)
JEL-codes: C13 E44 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:wei:journl:v:14:y:2024:i:2:p:151-162

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