Mines wake to power 'nightmare'

The “nightmare” of South Africa’s major gold, platinum and diamond mines shutting down because of power failures became a reality on Friday.

“Tens of millions of rands a day are being lost. It’s a nightmare,” said T-sec chief economist Mike Schussler.

The JSE gold mining sub-sector closed almost 6% lower on Friday. The move contributed to the gold price rising.
The London afternoon fixing was up $12, to $918,25 an ounce.

Chris Hart, an Investment Solution economist, said mining was a key industry for the country.

“From that point of view the [power] cuts seem ... almost a disaster.”

The Chamber of Mines earlier announced that several gold and platinum mines had to shut down operations because Eskom could not guarantee power supplies on Friday.

Chamber of Mines senior executive Frans Baker said coal supplies had also been soaked during the recent rains, which had compounded the problem.

Survival load

Apparently some power stations had also gone down.

In addition, De Beers Consolidated Mines announced on Friday that it had reduced its electricity consumption to a “survival load,” and had ceased production at its six mines: Venetia, Finsch, Kimberley, Cullinan, The Oaks and Namaqualand.

Survival load is the use of sufficient power to avoid risk to employees and property, and to maintain, in the case of De Beers’ two underground operations, Finsch and Cullinan Diamond Mine, the safe underground working conditions for when power is fully restored.

Harmony Gold spokesperson Amelia Soares said the company had only run emergency facilities on Friday.

The company would lose about R60-million from Friday’s suspended operations, she said.

Gold Fields spokesperson Willie Jacobsz said the company was losing production of about 7 000 ounces a day.

The impact of power cuts was “very, very dramatic. It is radical ... unprecedented,” he said.

AngloGold Ashanti said it had halted mining and gold recovery operations throughout the country.

BHP Billiton said its Bayside, Hillside and Mozal aluminium smelters continued to operate although power cuts were occurring at these locations.

The manganese mine at Hotazel was not operational on Friday.

“We have voluntarily reduced load at Metalloys and MMC since Thursday.”

The company said its coal mines were continuing to operate. “[We] are doing everything [we] can to ensure coal supply to Eskom.”

Trade union Solidarity said platinum company Lonmin had been busy withdrawing its workers from the mine on Friday.

None of the mining companies had a timeframe of how long the situation was expected to continue.

Gold Fields spokesperson Jacobsz said Eskom had indicated to them that all key industrial consumer loads would be reduced to “survival levels” or switched off for the next two to four weeks.

Poor short-term planning

Earlier on Friday, the Democratic Alliance said the shutdown of the mines indicated the electricity crisis was out of control.

“[Government’s] fundamental mismanagement of Eskom is now threatening to derail our future economic prospects,” said DA minerals and energy spokesperson Hendrik Schmidt.

Freedom Front Plus head Pieter Mulder said the government and Eskom could not expect consumers to solve the problem.

“The government’s measures will punish consumers with fines, quotas and rationing, while the crisis was largely caused by poor short-term planning and maintenance at Eskom.”

Hart said while in some ways, the power crisis was a result of the success of South Africa’s previous economic growth, “[Now] we can’t progress from what we have achieved”.

He said the rand was likely to weaken even more than it already had.

T-sec chief economist Schussler said he had not been approached by so many people for economic advice since September 11.

“My brain is fried. Everyone is up in arms,” he said.

“People are very, very negative. Negativity in its own right will have an impact on the economy.

“Would you invest in a country whose electricity is not secure? As we lose interest so do foreigners.”

Schussler said government needed to spend more time on the power issue instead of “fighting amongst themselves”.

“It’s time the blame gets laid on the right people.”

Eskom was not immediately available for comment. - Sapa

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