South Africa's platinum and gold production is threatened by an impending electricity shortage that will be the worst in five years, reports Bloomberg.
Eskom Holdings SOC Ltd. — the state-run electricity company which generates approximately 95% of the electricity used in the country and 45% for the continent — is straining to meet demand already as the country heads into the winter season when consumption will be even greater.
Supply is being pinched by faults at a Cape Town-area nuclear power plant and decreased imports from Mozambique due to flooding.
Eskom estimated March 18 the surplus capacity over peak demand at a thin 3.3% while it usually targets 15%.
The Energy Intensive User Group of Southern Africa — a non profit association of large-energy consumers like BHP Billiton Ltd. (ASE: BHP) and ArcelorMittal (NYSE: MT) — said it is seeing significant risks of power shortages as the system is in distress.
Five years ago, blackouts stopped mining by Anglo Amercian Plc (LSE: AAL.L), Impala Platinum Holdings Ltd. (JSE: IMP) and Harmony Gold Mining Co. (JSE: HAR) which pushed gold and platinum prices to records.
A shortage would damage South Africa's growth forecast for this year and has already affected the rand, which dropped to a four-year low this past week.
An analyst with Johannesburg-based Avior Research said it would be very difficult for mining companies to grow or expand projects when they are severely limited by energy supplies for their operations.
Image: Courtesy Eskom via Youtube