Rolling blackouts (again) threaten South African mine output

Problems with South Africa’s main electricity provider, Eskom, are crimping the plans of major mining companies that depend on regular power provision to run their operations, an energy users group has warned.

The Energy Intensive Users Group of Southern Africa said mining firms risk missing output targets due to a series of power plant breakdowns that companies are finding it hard to work around. Eskom, which provides 95 percent of the nation’s electricity, was forced to ration power for four straight days, and for the seventh time this year.

“Some of the companies have already indicated that they’re constrained,” Bloomberg quoted Roger Baxter, COO of South Africa’s Chamber of Mines, as saying last week.  “No doubt some of it is affecting production.”

According to Eskom, over a third, or 37%, of its installed generating capacity was offline as of last Thursday. South Africa’s major gold companies have since 2008 shifted 500 megawatts of consumption to off-peak periods, in order to avoid “load shedding”, another term for rolling blackouts, Baxter told Bloomberg.

Eskom has warned that there is a “high probability” of load shedding during this week’s Indaba in Cape Town, where over 7,000 attendees are expected to converge for the annual mining conference.

In 2008, blackouts stopped mining by Anglo American Plc (LON: AAL.L), Impala Platinum Holdings Ltd. (JSE: IMP) and Harmony Gold Mining Co. (JSE: HAR) which pushed gold and platinum prices to record highs.