SA mines shut operations because of Eskom
Eskom’s unprecedented cut of 6,000MW from the country's power grid has forced companies to stop their mines on Monday nights
SA's mining companies shut their underground mining operations and processing plants on Monday night because of unprecedented power cuts by monopoly electricity supplier Eskom.
Eskom has moved to stage six load-shedding cutting 6,000MW from its capacity as it grappled with a technical fault at its new Medupi power station, a plant that has run over costs and timelines. Wet coal and technical problems at other coal-burning plants have also contributed to the crisis.
It is the first time Eskom, the state-owed utility that has R450bn of debt, has removed so much power from the grid.
Eskom COO Jan Oberholzer talks to Business Day TV about the stage 6 load-shedding and the unpredictability and unreliability of its system.
Impala Platinum, the world's third-largest platinum miner, and Harmony Gold both said they had stopped their night shifts because of the power shortages.
“It’s very serious. We are not able to produce. What we lose today we can never catch up. If you lose a production shift it’s gone for good,” said Implats spokesperson Johan Theron.
“No mine in SA is able to operate or have production at this level power,” he said, noting that mines had to pay salaries despite losing production.
Mining is an important segment of SA's economy, contributing R351bn or 7.3% to the country's gross domestic product in 2018. It directly contributed R30bn to the government through taxes and royalties, and it employs 450,000 people.
Export sales of minerals of R333bn in 2018 made it one of the key foreign currency generators. SA is the world's largest source of platinum group metals, chrome and manganese.
If the load-shedding schedule remained above level four, which entailed 4,000MW cut from the grid, then Implats would prevent 25,000 people from going underground on Tuesday, he said.
If the power shortage lasted for another seven to 10 days ahead of the Christmas and year-end break of 10 days then the consequences for underground mines were severe, meaning a protracted start-up period to retrain and re-induct thousands of employees while making underground working areas safe, Theron said.
“We don’t know how long we will be at this power level and how long we won’t have production,” he said.
Harmony, one of the largest South African gold miners, kept up to 5,000 people on the surface rather than send them underground at its nine mines in SA. “Harmony has reduced power consumption at our operations to levels required only for the maintenance of emergency services,” said spokesperson Marian van der Walt.
London-listed Petra Diamonds said in a statement Eskom had asked it to reduce power from Monday evening.
Petra quickly moved to shut its Cullinan, Finsch and Koffiefontein mines.
“Production, hoisting and processing have stopped with immediate effect and the company is now removing all people from underground, except those required for essential services, with only pumping to prevent flooding and ventilation for safety being allowed,” it said.
The Minerals Council SA noted some of its members had also hoisted night shift workers to the surface.
“I can confirm there are a number of other mining companies considering the same thing because they can't take the risk of employees stranded underground due to power cuts,” said council spokesperson Charmane Russell.
The last time SA's mining industry was hit this hard by power cuts was in 2008 when Eskom said it could not guarantee supply. For underground operations, where tens of thousands of people work far below surface, the risk is too great to continue mining.
That power shortage, coupled with electricity tariffs rising more than 523% since 2006 and a further 30% increase planned over the next three years, led to the closure of many marginal gold shafts, crippling SA’s mining employment and gold production.
SA is now the world’s eighth-largest gold producer with about 230 tonnes a year, less than a quarter of its 1970s peak of 1,000 tonnes when it was the biggest source of the metal for decades.
Late on Monday Eskom downgraded load-shedding from stage 6 back to stage 4, which is a cut of 4,000MW. The utility said in a social media post that stage 4 will last from 10pm Monday to 11pm Tuesday.