Govt’s power plan for mines expected on Friday

The South African government will on Friday announce whether power supply can be increased to mines while maintaining the stability of the system.

The review of consumption comes in the wake of last week’s surprise announcement that the sector would lose thousands of jobs due to the power crisis.

Ways of mitigating the impact of the national electricity shortage on the mining industry were discussed by industry stakeholders at a meeting between the Department of Minerals and Energy and the mining sector on Thursday last week.

The department said the meeting provided a forum to discuss the industry’s current level of electricity consumption and a possible review of key users’ consumption targets.

“Industry players, with the exception of a few companies, have submitted their increased electricity capacity requirements to the department,” the department said in a statement.

“The department and other role players are now investigating the feasibility of increasing supply to the mines while maintaining the stability of the system,” it said, adding that Minerals and Energy Minister Buyelwa Sonjica would outline the outcome of the review process for the mining industry on Friday this week.

South African mines have been restricted to 90% of their normal average electricity since the beginning of February after agreeing to cut their consumption by 10% to help ease the severe power shortage that caused rolling blackouts late in January when mines were forced to shut down for a week.

These power restrictions were said to be necessary until 2012 when Eskom planned to bring additional generation on stream.

Gold, platinum and ferrochrome miners have been the hardest hit, with most advising that production forecasts for the year were unlikely to be met.

But it was not until last week’s warning by Gold Fields that it may have to slash 6 900 jobs as it considered mothballing shafts due to the lack of power that the government sat up and took notice.

AngloGold Ashanti, the country’s largest gold producer, said it had no immediate plans to close shafts or cut jobs, but smaller rival Harmony Gold Mining said it had already invited employees to consider voluntary retrenchment packages in light of the power cutbacks.

Trade union Solidarity estimated that South Africa’s power crisis could result in more than 15 000 job losses, while Efficient Group chief economist Dawie Roodt estimated that the number could be as high as 60 000 to 80 000.

Mining companies have said that a little more power could save jobs.

Gold Fields CEO Ian Cockerill confirmed that it had approached Eskom with a view to sourcing additional power, and said the jobs could be saved if it had 95% of its normal power needs.

The company estimated that every 1% cut in power is a 2% reduction in production, and based on the planned number of retrenchments, would translate into a 1,3% reduction in its workforce.

South African mines use about 15% of the country’s power, contribute 7% to 8% of gross domestic product and employ 490 000 people directly with an indirect effect on another five million dependants of mineworkers. — I-Net Bridge

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