Unreliable electricity supply forces miners to cut back production
JOHANNESBURG – Merafe Resources yesterday issued an SOS to its shareholders, warning that the ongoing power cuts that have forced mining companies to scale down on production and the constrained economic environment would have a negative impact on the future of some of the company’s operations and the wider ferro alloys sector in South Africa.
Merafe said it made major investments over the last 10 years to modernise operations against rising operating and employment costs, exacerbated by the recent introduction of the carbon tax, but the electricity interruptions could affect its performance.
“The business continues to engage with all stakeholders to determine what measures can be implemented to help alleviate the significant external pressures facing the industry,” the company said.
“Further updates will be provided to shareholders, as appropriate.”
Harmony Gold, which operates the Kusasalethu operation near Carletonville, said it canned yesterday’s day shift and night shift on Monday as the power interruptions led to a strain in operations.
The producer said it opted for the cancellations for the safety of thousands of its employees.
It said it reduced power consumption to levels required only for the maintenance of emergency service following a request from Eskom.
Harmony’s chief executive, Peter Steenkamp, said: “Production will resume shifts as soon as Eskom can provide us with the assurance that power supply will be more reliable.
JSE-listed diamond producer Petra Diamonds said it also stopped production, hoisting and processing of diamonds at its mines since Monday.
The company said it removed all employees from underground shafts, except those required for essential services, with only pumping to prevent flooding and ventilation for safety being allowed.
“Petra will update the market as soon as it receives a further notification as to how long the load curtailment will last, and therefore what impact this is likely to have on the company’s production performance,” the company said.
James Wellsted, spokesperson of diversified precious metal producer Sibanye-Stillwater, said its operations had been impacted to varying degrees throughout the last week of load shedding.
Wellsted said the miner halted certain activities at processing plants and rescheduled the pumping of underground water at the gold operations to off-peak periods.
He said that under Stage 4 the group continued to operate its underground mines.
“However, last night when Stage 6 came into effect except for essential service, we temporarily halted operations at our deep level mines. This morning, however, Stage 4 was reintroduced and underground operations will be resumed this afternoon,” said Wellsted.
Sibanye-Stillwater has an arrangement with Eskom, and had been helping to reduce its electricity usage since last week.
Anglo American Platinum said its South African operations had also been impacted by Eskom load shedding.
Spokesperson Jana Marais said operations had critical-control measures to manage risks in the event of power outages.
“We have standby diesel power generators in place, and all our operations have emergency-response plans which detail what should happen in the event of load shedding, which includes the safe evacuation of employees, shutdown procedures and communications,” Marais said.