In a surprise move, South African electricity utility Eskom has withdrawn its authorisation for the mining industry to increase its electricity use from 80% to 90% on Thursday. News of the decision came from Gold Fields, the world's fourth-largest gold producer, which informed the media in a statement.
Gold Fields, the world's fourth-largest gold producer, on Thursday warned that it may be forced to close shafts and restructure as a result of Eskom's request that the mining industry reduce its power use by 10%. Gold Fields CEO Ian Cockerill warned that the power shortages in South Africa would affect production in the March quarter.
South Africa's mining industry could lose up to R9,2-billion in revenue and the country's GDP could take a knock of up to R5,6-billion as a result of the power restrictions imposed on mines by Eskom last week. T-Sec economist Mike Schussler estimates that the mining industry is losing about R330-million in revenues a day.
South Africa's neighbours are feeling the pinch of Eskom's problems as they are plunged into darkness and face power failures of their own. Namibia, Zambia and Zimbabwe have all reported power failures and their governments have had to move quickly to clarify the reliability of future power supplies.
Diamond giant De Beers, which is 45% owned by global resources giant Anglo American, is to pay a $295-million class-action settlement after it was accused of fixing diamond prices and monopolising the United States diamond market. However, De Beers has not acknowledged that it violated the law or did anything wrong.
Electricity parastatal Eskom has failed to secure permission to hike annual tariffs by 18% after the National Energy Regulator (Nersa) on Thursday ruled that it may only implement a price increase of 14,2%. Nersa said that the rule changes applied for by Eskom in April had been declined.
Gold is on course to close 2007 at least $100 higher, setting the yellow metal up for its seventh consecutive year of gains in 2008. An ounce of gold cost $629,80 at the start of 2007 and was trading close to $800 an ounce by mid-December after touching $841,10 in November â€“- its highest level since 1980.
Xstrata, which has coal and alloy operations in South Africa, on Wednesday confirmed reports that it was in discussions with other mining companies. Shares in the resources group have risen sharply over the past few days on suggestions that Anglo American and Brazilian giant Vale were considering bids.
South Africa's gold production costs are among the highest in the world, the South African Reserve Bank said in its December <i>Quarterly Bulletin</i> released on Tuesday. Continued increases in input costs had an adverse affect on gold mining in the third quarter of 2007.
Rio Tinto, the world's third-largest resources group, has played its trump card in its battle to maintain its independence in the wake of BHP Billiton's hard-sold merger proposal by calling on the United Kindom's Takeover Panel to set a deadline for a formal offer.
De Beers Consolidated Mines's R1-billion sale of its Cullinan diamond mine in Pretoria to the Petra Diamonds Cullinan Consortium has taken an important step forward with Monday's announcement that the Department of Minerals and Energy has agreed to convert the old-order mining right held by De Beers into a new-order mining right.
Emerging global superpower China may snatch South Africa's crown as the world's top gold producer this year. South Africa has thus far managed to hold on to the crown, but China, which has established itself as the world's second-largest gold producer after seven years of continued growth, now looks set to overtake South Africa in the production stakes.