SA mines make slow progress in restarting
South African mines made slow progress in bringing back production on Friday after Eskom allowed them to make only limited increases to their electricity consumption.
After first saying it would be able to meet 90% of the needs of the gold, platinum, diamond and coal miners, utility Eskom said on Thursday that generating-plant breakdowns meant it could supply only 80% of their needs.
The power cuts that shut the mines a week ago have helped push global precious metals prices to record highs and stoked concerns about a slowdown of growth in Africa’s largest economy.
They have also piled pressure on President Thabo Mbeki’s government, accused by critics of ignoring warnings that the crisis was coming.
Eskom says shortages are likely to last several years, with rolling blackouts scheduled for next month, and the power cuts have cast a shadow over South Africa’s ability to host the 2010 Soccer World Cup.
Amid media speculation that mine shutdowns could bring job cuts, mining firms said on Friday that operations were progressing slowly after Eskom raised their power allowance.
Gold Fields, the world’s number four gold producer, said it needed a more stable power supply.
“While we welcome the reinstatement of the 90% power levels, we urgently need a guarantee of a sustainable level of supply,” said Terence Goodlace, head of Gold Fields’s South African operations.
“We need to have a consistent guaranteed supply to re-establish our operations safely at these levels.”
Rival AngloGold Ashanti said it would be some time before it could return to full capacity. Alan Fine, the company’s spokesperson, said the world’s third-biggest producer of the metal should be running its mines at “optimal levels” by the end of next week.
Harmony Gold said its energy use peaked overnight at 85% but it had limited consumption during the day.
“We use the high electricity consuming equipment overnight. We try to use the equipment that uses less electricity during the day,” Harmony spokesperson Amelia Soares said.
Analysts have forecast even slower growth this year for South Africa’s economy, which had already showed signs of cooling from 5% annual growth due to the impact of a series of interest-rate increases since June 2006.
Mining is one of South Africa’s biggest foreign-currency earners and the industry’s hiccups have been felt across local markets.
The rand has weakened partly as a result of the supply fears, which also have helped push global platinum and gold prices to record highs.—Reuters