Mines brace for new outages

South Africa’s mining industry is bracing itself for the loss of production and jobs in the event the electricity outages envisaged by power utility Eskom are implemented.

Although sacrifices made by the industry to scale down production by 10 percent could give Eskom a reprieve, there is uncertainty about job stability in the industry, which employs about 500 000 people.

The impact on mining houses is likely to vary according to the extraction methods. Gold producers use intensive deep level mining methods, which are high in electricity usage, while coal producers use open cast mining, which uses the least electricity.

John Wallington, the chief executive at Coal of Africa, said yesterday that the company did not have contingency plans should Eskom fail to put in place a safety net to deal with the energy gap.

“It will be difficult if we are to have load shedding. It was strenuous in 2008, the issue of power is serious and could cause difficulties if we don’t handle it correctly.”

Wallington said job losses were inevitable if power issues were not resolved. “When the economy is reduced, jobs are lost. I hope a quick solution can be found,” he said.

Songezo Zibi, the corporate affairs manager at Xstrata, said the firm would play it by ear.

“If the grid is under pressure, we reduce our production. For instance, instead of doing 100 loads, we’ll do 80 and if the grid is not under pressure the following day, we’ll do 120. Basically, we adjust our load according to the grid power,” he said.

Zibi said the company was so far operating under the assumption that the impact would be manageable.

“However, if it’s more severe than the instances we’ve seen, where we have rolling blackouts for a number of days or weeks, there is a greater possibility of job losses then,” he said.

Anglo American spokesman Pranill Ramchander said production at its platinum and coal operations were negatively affected during the load shedding in 2008.

He added that the company had since then put in place contingency plans for all its operations. “They (Eskom) reduced power to 90 percent in 2008, our coal and platinum operations had to shut down in some instances.“

Ramchander said Anglo had introduced energy efficiency measures throughout its operations and was working closely with the government and the industry on further investigating energy-efficient strategies.

Tom Tweedy, the spokesman for De Beers, said it was difficult to predict how its diamond mining operations would be affected.

“It is very difficult to estimate what the impact of outages will be on our production because we haven’t been notified on the details of how long this could go on and which parts of the country it will hit hard, so we don’t know how expensive this can be to us.”

Tweedy said the company would mange its operations better with forewarning.

“What we really need Eskom to do this time is give us a good notice period because we have employees working underground. The safety aspect of it is what is really important to us.”

Labour unions are up in arms over the issue, with Solidarity warning of the dire consequences of blackouts.

“If the power grid is under pressure, mines will be forced to shut down as a measure of cutting production. This could have an impact on job losses and on retrenchments, depending on the pressure on the grid,” said Leigh McMaster, the health and safety researcher for the trade union.

He said smaller operators were most at risk.

“You will find that the smaller operators will be reactive, they certainly will have issues should there be electricity shortages,” he said.

National Union of Mineworkers general secretary Frans Baleni said any power outages that might result from a shortage of generating capacity would be “catastrophic”.

“If you are going to have blackouts, production will be negatively affected. The first thing that mining companies can do after that is to reduce overheads by cutting labour,” Baleni said.

Eskom’s chief executive, Brian Dames, warned last week that the power utility would struggle to keep the lights on this year and next year.

He warned of an energy gap in 2012 equivalent to about 1 000 megawatts of baseload capacity in South Africa, and called for a range of cross-cutting interventions, including the acceleration of the procurement process for renewable energy. - Dineo Matomela and Londiwe Buthelezi