/ 6 March 2008

SA mines to get 5% more power to stem job losses

The South African government has moved to stem the haemorrhaging of jobs in the mining industry by allowing mines to increase their power consumption to 95% of normal usage.

Minister of Energy and Minerals Buyelwa Sonjica was cited in various media reports on Thursday as saying that mines would be allowed to up their power use by 5% from 90% now that the electricity system has stabilised.

South African mines have been restricted to 90% of their normal average electricity provision 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 plans to bring additional generation on stream.

Taking this into account, minerals and metals producers revised their forecast output for 2008, and several started announcing plans to cut jobs as they grappled with the prospect of closing or mothballing shafts.

The South African government said it would make an announcement concerning its power plans for mines on Friday.

Having held several emergency meetings with industry stakeholders, the Department of Minerals and Energy said it has been considering whether it can increase power supply to mines while maintaining the stability of the system as a means of mitigating the impact of the national electricity shortage on the mining industry.

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

“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 Sonjica would outline the outcome of the review process for the mining industry on Friday this week.

While the mining industry will be pleased with the announcement — Gold Fields indicated that the 6 900 jobs at risk at its South African operations as a result of the power restrictions could be saved if it had access to 95% of its normal power needs — it is still unclear whether the government will extend the 5% increase to other key Eskom clients, including those in construction and industry.

Given the importance of the mining industry to the South African economy, the government has already indicated that the mining sector will be given priority.

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