South African mining threatened by electricity shortage

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