Johannesburg, South Africa — MININGREVIEW.COM — 03 May 2008 – The South African Chamber of Mines says the country’s gold production fell by a substantial 15.6% to 52 228 kg in the first quarter of 2008, compared to the fourth quarter of 2007.

A statement from the Chamber released here today added that on a year-on-year basis, the rate of decline in gold production was 16.8% in the first quarter of 2008. The key reason for the large drop was the national electricity emergency which effectively closed the gold mining industry from 25 to 31 January 2008.

South African mines were forced to operate thereafter on below-capacity power supplies of 90% of their normal needs, as state-owned power utility Eskom was unable to meet power demand, and rationed power to avoid a collapse of the electricity network.

Reuters reports that at the time, the Chamber warned of a 15-20% drop in gold mining output in the country, and asked Eskom to boost power supply to mines to avoid shut downs that may have cost jobs. Eskom lifted supply to some gold producers to around 95%.

Eskom has warned the power crisis may last for years, and blames its problems on several factors including the failure of the government to invest in electricity generating plants, maintenance problems at its power plants and low coal supplies.

South Africa’s economic growth eased to its lowest level in more than six years in the first quarter of 2008, partly owing to the power crisis.

Figures released last week by Statistics South Africa said first-quarter growth slowed to 2.1% on a seasonally adjusted and annualised basis from 5.3% in the fourth quarter of last year.

Mining output fell by 22.1 percent in the quarter — its lowest growth since the second quarter of 1967 — largely due to the electricity shortages that forced mines to halt production.