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

Author

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  • Andrew Phiri

    (Department of Economics, Nelson Mandela University, Port Elizabeth, South Africa)

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.

Suggested Citation

  • Andrew Phiri, 2024. "Does Loadshedding Impact the Mining Sector in South Africa? A Time-Frequency Inquiry," Economic Research Guardian, Mutascu Publishing, vol. 14(2), pages 151-162, December.
    • Handle: RePEc:wei:journl:v:14:y:2024:i:2:p:151-162
    as

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    References listed on IDEAS

    as
    1. Fama, Eugene F, 1970. "Efficient Capital Markets: A Review of Theory and Empirical Work," Journal of Finance, American Finance Association, vol. 25(2), pages 383-417, May.
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    More about this item

    Keywords

    Loadshedding; Unplanned capability loss factor; Mining shares; South Africa;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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