South African mining companies hope to resume production later this week after being allowed to carry out underground maintenance work in mines across the country that have been crippled by a power crisis.
Analysts estimated that hundreds of millions of rand had already been lost by the sector as the halt on mining in the world’s biggest platinum and number two gold producer entered its fourth day on Monday.
”We are starting to emerge from a crisis that had the potential to undermine the viability of the South African gold industry,” Mark Cutifani, the chief executive officer of AngloGold Ashanti, said in a statement.
A meeting on Wednesday between mining firms, government officials and Eskom would determine when and how mines could start production, expected to be in a phased process so as not to compromise the power grid.
Mines would be asked to cut their power usage, officials said.
Eskom has warned the crisis may last for up to four weeks.
The power crisis became a national emergency on Friday, stopping production in diamond, gold, platinum, coal and other mines and helping send prices of precious metals to record highs and weakening the rand and gold shares.
The government insists the crisis does not threaten the country’s plans to host the 2010 Soccer World Cup.
For weeks, homes, malls and businesses have been dark for hours a day while failed traffic lights have caused accidents.
President Thabo Mbeki’s government, distracted by a leadership struggle in the African National Congress, faces growing criticism for years of underinvestment in power generation.
Booming economy
Analysts fear the booming economy, whose growth the government has targeted at 6% in order to fight poverty, could slow down and say the government ignored warnings as far back as 10 years ago from experts to build new power plants.
Mineral extraction was unlikely to take place on Monday, but authorities said they would guarantee enough electricity to ”make safe” the mining areas, which could become risky or flooded if left without maintenance for long periods.
Anglo Platinum, the world’s biggest producer, said some production may result from blasting meant to make the areas safe, but there would be no mining, or smelting.
”We expect more clarity on when we can resume mining later in the week,” said a company spokesperson.
AngloGold, the world’s third biggest gold producer, said in a statement it anticipates more power supply later this week that should enable a phased return to normal mining operations.
The rand fell 1% to 7,2250 against the dollar as investors continued to shun the currency partly as a result of fears the power shortage could cut economic growth.
Gold and platinum held near their historic highs on jitters over the power woes. Spot gold rose to $916,50/917,50 an ounce as platinum rose to $1 685/1 690 an ounce.
The crisis started after Eskom took down some power plants for routine summer maintenance. But other plants have broken down unexpectedly and coal stockpiles have dwindled.
Eskom plans to invest R300-billion in power generation and infrastructure over the next five years, and has warned the country to expect a bumpy ride. – Reuters