Amplats, Harmony say power cuts threaten output

Johannesburg - Anglo American Platinum [JSE:AMS] and Harmony Gold [JSE:HAR] said they will see production losses should Eskom persist with power cuts.

While Amplats can mitigate the effect of cuts by doing maintenance on refineries and concentrators until April, it will suffer output losses thereafter, Chief Executive Officer Chris Griffith said in an interview on Monday.

Harmony lost about 50kg, or 1 600 troy ounces, of production worth R23m during the three months through December, it said on Monday.

“For the first four months of the year, what I’m seeing now I can manage with, but if that goes into the next part of the year I’m in trouble,” Griffith said.

“It is not possible not to have impact if you see this kind of load-shedding for the rest of the year,” he said, referring to the rotational blackouts imposed by the state-owned power supplier.

Large industrial users such as Harmony and Amplats are required to cut electricity consumption by as much as 20% when Eskom rations power.

The utility started a seventh consecutive day of rolling blackouts on Monday due to a shortage of capacity, it said on its Twitter account.

Offpeak Operations

Amplats reduces demand at its concentrators and refineries when Eskom asks it to lower consumption, Griffith said. The output of raw material from the company’s mines isn’t affected, he said.

“What we see is a backup of concentrate ahead of the smelter,” Griffith said. “As long as we’ve got decent enough runs after that, we can usually catch up.”

Harmony, the country’s third-biggest producer of bullion, shifted energy-intensive activities such as hoisting ore from its shafts to off-peak hours and amassed stockpiles of gold- bearing material by shutting its mills, which crush rock, during shortages, CEO Graham Briggs said.

The outlook for power constraints is “even worse” in the current quarter, he said.

“We’re big power users and when we have to switch the lifts off, we can’t get around that,” Briggs said in an interview. “It’s a crazy way to do business.”

Eskom said 37% of its installed generating capacity of 41 995 megawatts was offline last Thursday, the most since it started providing twice-weekly data in January 2012.

Of that, unforeseen plant breakdowns comprised 10 424 megawatts, or more than its two biggest facilities are able to provide, while maintenance accounted for 5 043 megawatts.

CHECK OUT: News24's load shedding planner

 

 


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