HomeBase MetalsMining industry wins power cut reprieve

Mining industry wins power cut reprieve

Power – South
African mines
win reprieve
Johannesburg, South Africa — MININGREVIEW.COM — 04 December 2008 – South Africa has won a reprieve from an electricity shortage that has curbed supplies to mines, as the global credit crisis slashes demand for commodities, prompting various companies to shut power-hungry smelters.

Bloomberg News reports that Xstrata, Samancor Chrome Ltd., International Ferro Metals Ltd., Assmang Ltd. and Hernic Ferrochrome Ltd. have shut ferrochrome plants, pushing electricity demand down to levels last seen in 2005.

“It’s resulting in a direct electricity consumption reduction,’” said Andrew Etzinger – demand-side general manager at state-owned utility Eskom Holdings Ltd. – said in an interview with Bloomberg. “Metal production is extremely energy intensive.’”

Power cuts, caused by a delay in a government decision to allow Eskom to expand, closed most mines in the country for several days in January, caused rolling blackouts across cities and leading to curbs in supplies to mines, including some of the world’s biggest producers of platinum and gold.

The news agency reports that Hernic, which normally uses 200 megawatts of power, has shut 78 % of its capacity. Bigger rival Samancor Chrome Ltd. will shut all of its furnaces from the middle of December until the end of February, and International Ferro has closed its plants. Xstrata, which together with Merafe Resources Ltd. operates the world’s biggest ferrochrome producer using 1 000 megawatts, has idled 52% of capacity.

Anglo American plc and Anglo Platinum Ltd. are among mining companies that are reviewing projects. Simmer & Jack and DRDGold Ltd. have said they may close existing gold mines in South Africa, while Lonmin plc is shutting a platinum mine.

“South African power demand yesterday was about 29 700 megawatts,” Etzinger said. Eskom – which supplies 95% of South Africa’s power – has about 40 500 megawatts of capacity, a portion of which is often undergoing maintenance, while some – such as diesel-fired generators and pumped storage hydropower plants – are usually operational for only a few hours a day.

“While demand has declined, Eskom is continuing unabated with its five-year, R343 billion expansion programme,” Etzinger said. “If market conditions improve for our customers, they may restart those furnaces,” Etzinger said. “We are still working as though we’re short of capacity in the country, which we are, he added.