Eskom may be forced to cut mines' power

Power may have to be cut to South Africa’s vital gold and platinum mines if more generators fail because of bad weather, Eskom said on Tuesday, sending local mining shares tumbling.

“At the moment we are in a very tight situation. If we lose an additional two generators in the course of this morning we could possibly once again be in a force majeure situation,” said Eskom spokesperson Andrew Etzinger. “It’s really critical at the moment.”

South Africa is the world’s biggest platinum producer and the second-biggest producer of gold after China.

The electricity grid supplying Africa’s biggest economy came close to collapse in January, forcing the government to declare a national emergency.
Gold and platinum mines were forced to shut down for five days.

Since then mines have been operating below full power, driving up precious metal prices and raising fears of possible job losses and slowed growth.

The company would declare force majeure if it is unable to meet supply contract obligations.

Etzinger said nine generators had tripped, and another nine were down for planned maintenance. South Africa has about 160 generators.

THe country’s power crisis follows years of underspending by Eskom on generation capacity.

Eskom has restarted a programme of rolling load-shedding, and many Johannesburg suburbs were without power on Tuesday, causing heavy congestion and delays as traffic lights failed.

Mining shares tumble

Gold and other mining shares on the Johannesburg bourse tumbled as investors worried that output would suffer.

“People are worrying power might be cut off to the mines and if we haven’t got power, that is not good,” said one Johannesburg trader.

The JSE Securities Exchange’s gold sector fell as much as 2,6%.

Etzinger said three generators were expected to be back in service on Tuesday. “Until such time as those three come into service we’re extremely vulnerable.”

He said mining companies were aware of the situation but Gold Fields and Anglo American said they had received no notification that power may be cut.

“We have not received any official notice from Eskom about our power being reduced at the mines. We’re currently still getting the 95% that we announced yesterday,” Gold Fields spokesperson Andrew Davidson said.

He said the company would need at least four hours notice to evacuate miners before shutting down elevators and water pumps.

Anglo American spokesperson Pranill Ramchander said his company had not been informed by Eskom and a spokesperson for Anglo Platinum said the world’s largest producer had received no notice.

Etzinger said the problem was compounded by persistent rain in north-eastern Mpumalanga province where coal mines and the utility’s coal-fired power stations are concentrated. Wet coal is difficult to handle.

“This is a growing concern as well, both in terms of the coal mines as well as our power station operations. This is adding to the problem,” he said.

South Africa generates most of its electricity from coal. - Reuters

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