South African gold and platinum mines still at heavily reduced production rates

South African power crisis continues as Eskom fails to deliver the promised 90 percent power level to the mines and aluminium potlines are shut down at two big aluminium smelters.

JOHANNESBURG - 

In South Africa ahead of the Mining Indaba meeting and have just been subjected to our first power outage in Rosebank, Johannesburg after being at work here for about three quarters of an hour. The process has been called load shedding, but now in South African political speak it is ‘load curtailing'. While the mines only were shut down last Friday, the reinstatement of 90 percent power which was supposed to happen today, but hasn't yet, looks like it may mean that other businesses will suffer to allow the country's economic lifeblood to commence work again.

What seems to have been missed by some sources and news outlets around the world is that ‘load curtailment' has been a fact of life here since the beginning of the second week in January when one of Eskom's key generating units went down. This has been coupled with a number of further unforeseen breakdowns, maintenance failures and coal supply problems and the mines may not be out of the woods yet. Should any more problems occur at Eskom then the mines and smelters will likely face further outages and until the utility's's planned maintenance shutdowns, which were one of the causes of the problem in the first place, are phased back in.

Indeed as we write, Gold Fields has announced that Eskom has been unable to restore power levels to the promised 90 percent which the mines have deemed necessary to resume production today, but can only supply 80 percent which would be touch and go as far as resuming operations are concerned. In talking to Gold Fields spokesman Willie Jacobsz, Mineweb learnt that at 90 percent power the mines have to cut mine production by 15-20 percent of the norm and at only 80 percent supply then it is reasonable to assume that this level of production loss would be at least doubled as, with worker safety concerns in mind, the mines have to work to the lowest possible denominator.

At the mines themselves, around 50 percent of the power supply is necessary to maintain conditions and keep the mines open, but not to produce ore. The second 50 percent can be applied for the production process, so a cut of 20 percent out of this 50 percent will mean that some production shafts will have to remain closed just to allow others to operate at all.

While the first announcement has come from Gold Fields, the 80 percent power supply delivery will apply to all the country's major mines , so South African gold and platinum production in particular are still being heavily impacted and will adversely affect mining company profits, the whole South African economy and labour as well.

Ian Cockerill, Gold Fields CEO, speaking after Eskom's announcement to the mines was obviously angry with the latest news effectively saying that the country's economy is being "systematically destroyed" by the power situation, and that he could foresee big job losses as a result. Uncertainty over power supply makes forward contingency planning difficult and unrealistic.

While overshadowed by the gold and platinum sector news, perhaps even more serious is that the Hillside and Mozal (in Mozambique) aluminium smelters have had to shut down production potlines and these take a substantial time to be restarted and production losses here will be heavy - and this is despite absolute guarantees from Eskom, now shown to be worthless, of continuity of full power supply.

So what of the Mining Indaba next week in Cape Town. Very obviously the biggest talking point will be the power supply crisis which seems to be bringing virtually the whole of southern Africa back to the dark ages. This is not a short term problem and it may well be the middle of the next decade before any kind of secure supply delivery can be assured across the region. Difficult times for mining companies - and as pointed out here earlier, new projects may bear the brunt as they are well down the priority line when it comes to supplying the vital electricity to get them started up.

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