South Africa’s miners shut down by power cuts

South African miners have been hit by the country’s biggest blackouts yet as troubles at the state power monopoly Eskom forced them to halt operations.

Producers including Sibanye-Stillwater and Petra Diamonds said they had to close underground mines on Monday after Eskom, which supplies most of the country’s power, removed power to stave off grid collapse.

Eskom’s decision to implement for the first time a so-called “stage 6” blackout — removing 6,000 megawatts of power from the grid — came amid a series of breakdowns at coal power plants in Africa’s most industrial nation.

“It’s a major concern. We’re an energy-intensive industry and Eskom is our single source of electricity. It’s a major risk going forward,” said James Wellsted, head of investor relations at Sibanye, the world’s largest platinum producer. “Eskom is the primary risk to the South African economy.”

President Cyril Ramaphosa admitted that the blackouts were causing “great harm” to the economy.

Eskom was once the bedrock of the mining industry but the near century-old monopoly was hollowed out by waste and looting under former president Jacob Zuma.

Maintenance of ageing coal plants was hobbled and their new replacement power plants have been riddled with flaws. Eskom is now reliant on state bailouts to pay back $30bn of debts.

The utility reverted to severe rolling “stage 4” cuts of 4,000 megawatts of power on Tuesday, but was still scrambling to fix breakdowns affecting about 15,000 megawatts, roughly a third of its generating capacity. The rolling blackouts were escalated to stage 4 on Friday last week, which South Africa had experienced in March.

Several mining companies said they planned to send workers back down their mines on Tuesday evening but fear the reliability of power supplies.

India’s Vedanta said stage 4 blackouts at its zinc operations in South Africa meant losing a fifth of its electricity while stage 6 led to a “total loss of production”.

The company warned that conditions were “less than ideal” to implement plans to expand its operations in South Africa and it “remains exceptionally concerned at the impact which Eskom’s instability will have on the country as a whole and on the mining industry in particular”.

Given the severity of the latest blackouts Mr Ramaphosa’s government is also under growing pressure to approve proposals for mining companies to generate some independent power, though they would still rely on Eskom because of the scale of the power needed.

Johan Theron, a spokesperson at Impala, a platinum metals producer that curtailed operations, said Eskom will have a window for emergency repairs as mining companies wind down over Christmas and new year.

“When we come back in mid-January, we expect all the mines to be at full production. If we find ourselves in the same situation, we would be very concerned,” he said.


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