Bloomberg: South Africa’s mining industry is heading for its worst electricity shortage in five years
South Africa’s mining industry, backbone of the continent’s biggest economy, is heading for its worst electricity shortage in five years in a threat to platinum and gold production and to the rand currency.
State-owned Eskom Holdings SOC Ltd. is straining to meet demand from a growing economy as consumption is set to swell when the Southern Hemisphere winter drives the need for heat. Faults at a nuclear power plant near Cape Town are crimping supply, while imports are reduced because of flooding in Mozambique.
“We do see a significant risk of power shortages,” Shaun Nel, director at the Energy Intensive User Group of Southern Africa, whose 32 members include the local units of BHP Billiton Ltd. (BHP) and ArcelorMittal. (MT) “We are seeing a significant number of factors that point to a system in distress.”
A repeat of the January 2008 blackouts that halted Anglo American Plc (AAL) mines for five days and paralyzed factories would imperil South Africa’s 2013 growth forecast of 2.7 percent. The rand dropped to a four-year low this week, partly on concern that disruptions to mining will cut exports from the holder of the biggest-known reserves of platinum and chrome and fifth- largest gold producer.
Eskom, generator of about 95 percent of the nation’s power, estimated surplus capacity over peak demand for March 18 at 1.5 percent. That’s as thin as the margin was when the power cuts struck five years ago, pushing gold and platinum prices to records as Anglo, Impala Platinum Holdings Ltd. (IMP) and Harmony Gold Mining Co. (HAR) halted operations.
While Eskom later revised that March 18 margin to 3.3 percent, it’s razor-thin compared with a level of as much as 17 percent in mid-December.
An average of about 10,800 megawatts, or 25 percent of Eskom’s total capacity including imports from Mozambique, has been unavailable this year because of maintenance, both planned and unforseen, according to data from the Johannesburg-based utility.