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SA mining to have 90% power by weekend
Allan Seccombe
Posted: Tue, 29 Jan 2008
[miningmx.com] -- MINING companies in South Africa will receive 90% of their power consumption needs by the end of the week, clearing the way for resumption of production after being brought to a standstill by electricity utility Eskom on 25 January.
After meetings with South African businesses and the mining sector on Tuesday, Public Enterprises Minister Alec Erwin said mining companies were currently being supplied with up to 70% of their power needs, enough only for essential maintenance work.
"By late Thursday we will ramp up to 90%," Erwin said at a media briefing after the meetings. "We are pleased to be able to restore a reasonable degree of production by the end of this week."
AngloGold Ashanti has started bringing its underground mines back into production and it expects all mines to be restored to full output by the end of next week.
"These plans are
based on an expectation that AngloGold Ashanti will be able
to draw on 90% of its demand prior to last week`s shut-down," AngloGold said in a statement. "It is not possible at this time to estimate the operating and financial consequences of the current events."
Mining companies have agreed find ways to reduce their power consumption by 10%. The agreement came after Eskom told the mining industry on 25 January that it could not meet demand. Mines shut down and production was halted.
While welcoming the return of power levels, Chamber of Mines President Sipho Nkosi said there would undoubtedly be an impact on production.
"We are not going to be at those production levels before all this happened, not for a while," Nkosi said. "But, the production we achieve at 90% is going to be stable production."
Nkosi, who is also CEO of diversified miner Exxaro Resources, said he doubted the power problems would deter investment. Not only was Exxaro pushing ahead with its growth plans, but Eskom had a long pipeline to increase electricity generation capacity in coming years, something which should bring potential investors some comfort, he said.
Eskom is spending R300bn over five years on new plants, de-mothballing other plants and investing in alternative power sources. In all, these projects should add another 19,136
MW to the existing 39,200 MW by 2015.
Erwin said it was difficult to say what the exact impact of the power crisis would be on South Africa's economic growth, but Minerals and Energy Minister Buyelwa Sonjica said the government was determined to keep the economy on its growth track.
"We'll do all in our power as government to ensure this situation does not impact negatively on new investment," Sonjica said, adding the government was drawing on lessons learnt during the California power crisis.
The government will talk to large investors and coordinate their entry into the country to prevent undue pressure on power supplies, Erwin said.
A three-phase "total recovery programme" will start in February. During that month, the authorities want to cut power consumption by 4,000 MW so that Eskom can stablise the system and catch up on maintenance, one of the issues that led to the crisis.
The quality and size of coal stocks will also be
addressed during this period. Eskom wants 20 weeks of stock piles at its power plants, up from the one to 10 weeks of supply it now has, said Eskom CEO Jacob Maroga.
The second phase will last four months and is designed to ration consumption, reducing demand by 3,000 MW up to the start of July. This could entail penalties and pricing mechanisms to curtail demand. Industry has been approached to devise ways to cut their power usage, Maroga said.
The third phase will focus on conserving power, doing away with the need for rationing.
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