SA power crisis ‘an emergency’, mines shut down

MARIETTE LE ROUX
CAPE TOWN - The South African government labelled crippling electricity shortages a national emergency Friday, warning of price hikes and quotas to steady supply ahead of the 2010 football World Cup.

Three of the country’s top gold producers suspended production at all their mines in the country owing to a power shortage on Friday.

AngloGold Ashanti, Gold Fields, and Harmony said they stopped all gold mining after they were informed by state-owned power utility Eskom that it could not guarantee power supply to their operations.

Shares in the companies fell sharply and gold hit a record high of US$916,90 an ounce after the news.

The world’s No.1 platinum producer, Anglo Platinum (Angloplat), also said it had shut down production at all its South African mines to reduce electricity consumption.

“It is the view of cabinet that the unprecedented unplanned power outages must now be treated as a national electricity emergency,” Public Enterprises Minister Alec Erwin told journalists.

This “has to be addressed with the urgent, vigorous and co-ordinated actions commensurate with such an emergency situation,” he said.

The focus would be on reducing demand through price hikes, incentives and penalties to encourage consumers to switch to gas and solar energy, as well as savings measures like as a massive roll-out of low-energy lightbulbs.

“It is a reality that there will be further significant increases in electricity prices,” said Erwin.

The state supplier Eskom was given permission last week to raise tariffs by 14,2 per cent but Erwin’s comments mean that further above-inflation increases are on the cards.

The government intended to save up to 3 500 MW in output by 2010, a reduction of about 10 per cent.

“To stabilise supply we need to take demand out of the system,” said the minister.

Apologising on the government’s behalf for poor planning, he said there was “no question of stopping” large foreign investment projects and said the 2010 football spectacular should not be adversely affected.

“There is no threat to the successful holding of the event as plans to ensure electricity security in that period are well advanced.”

Erwin said plans to build new power stations and recommission others would be fast-tracked where possible.

Parts of Africa’s economic powerhouse have been intermittently plunged into darkness in recent weeks as state power utility Eskom imposes planned blackouts to conserve dwindling electricity supplies.

Analysts have warned of foreign investors taking flight as everything from factory production to traffic regulation has been affected.

Eskom itself has warned it would be foolhardy to attract major industrial projects in this phase, with some estimates putting the overall cost of the outages to the South African economy at beyond two billion rand so far.

Said Erwin: “There is no question of stopping contracted projects or freezing any new projects.

What will happen is more systematic scheduling and evaluation of projects.

“One of our key objectives is to ensure we retain our current rate of economic growth.”

But he admitted the country would be hard-pressed to take on more such massive projects as the aluminium smelter being constructed in the Eastern Cape province by Canadian firm Alcan.

“This is probably the last of the big aluminium smelters for some time to come.”

Erwin said the rate of economic growth and electricity demand had surprised the government, causing it to realise too late the need for new capacity.

Coupled with a worldwide decline in coal quality and availability, South Africa has been plunged in a state of “unacceptable disruptions.”

“The president has accepted that this government got its timing wrong,” said Erwin.

Energy Minister Buyelwa Sonjica told the same briefing that electricity quota details had yet to be worked out and negotiations were under way with big business.

She said the government planned to restrict the manufacture of incandescent light bulbs, subsidise solar water heaters, convert traffic lights to solar power, and order the hospitality industry to convert all water heating to solar power.

Nampa-AFP

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