Mines halt operations countrywide as Eskom asks for 20% power savings

Several mining companies in South Africa have had to temporarily shut down domestic operations after receiving requests by Eskom to reduce their load on the national power system.

This comes after Eskom instituted stage 6 load shedding for the first time on Monday evening. Stage 6 was downgraded to stage 4, which the power utility expects to continue until 11pm. 

The Minerals Council of South Africa, which represents 90% of the companies in SA's industry, confirmed to Fin24 on Tuesday that all of its member mines had been alerted by Eskom to reduce their loads by 20%.

Council spokesperson Alan Fine said this would impact different mines in different ways, as the mines may choose to conserve energy differently.

"Underground mines are far more seriously affected… In fact for most mines processing facilities will need to be curtailed quite substantially, if not totally."

The end result, said Fine, was that many mines can no longer carry on with normal mining.

"All mines are able to do is to ensure the health and safety of personnel, and the integrity of infrastructure. No mining can be done in those circumstances," he explained.

Fine said the impact of load shedding on the council's members would be "substantial".

Chrome producer Merafe Resources said the decision by Eskom to initiate stage 4 and 6 load shedding, alongside a challenging economic environment, was "expected to have a negative impact on the future economic viability of some of the company’s operations and the wider ferroalloys sector in South Africa". Merafe is the junior partner in chrome joint venture with Glencore. 

Diamond mining company Petra Diamonds in a statement on Monday said that it halted operations at three of its mines - Cullinan, Finsch and Koffiefontein – on a request from Eskom to help the state entity conserve power.

In a notice to shareholders on Tuesday, meanwhile, Harmony Gold said its night shift employees did not go underground on Monday, and will not go underground on Tuesday night either.

"In the interest of safety and due to reduced power supply, night shift employees at Harmony's South African underground operations did not go underground last night and today's day shift employees, similarly, will stay on surface," the notice read.

"We will resume shifts as soon as Eskom is able to provide us with the assurance that power supply will be more reliable," said Harmony chief executive officer Peter Steenkamp.

In an emailed response to questions from Fin24, Sibanye-Stillwater spokesperson James Wellsted said that the company has been reducing its electricity use to assist Eskom since last week. "We have been halting the mills at our processing plants as well as diverging some of our activities – for example moving the pumping of underground water at the gold operations to off peak periods."

"Under stage 4 we continue to operate our underground mines, however last night (Monday, December 9, 2019) when stage 6 came into effect (except for essential services) we temporarily halted the operations at our deep level mines," he said.

Sibanye resumed underground operations on Tuesday morning as load shedding was downgraded to stage 4.

Wellsted said that while Sibanye is managing load shedding at its operations, production is affected. The extent of the impact on production depends on how long load shedding persists, he said.

Anglo American South Africa's external communication manager, Sibusiso Tshabalala, told Fin24 via email that its operations were also impacted by rotational power cuts load shedding. However, the power utility provides notifications in advance of load curtailment – as it is known in the industry – which "to some extent" assists operations in minimising the impact of supply disruption.

Anglo American's emergency response plans in the event of load shedding include safe evacuation of its employees, shutdown procedures and communications," he explained.

"Anglo American has ongoing engagements with Eskom and as part of the Intensive Energy User Group, we are engaging with Eskom to understand better the technical constraints they are dealing with, and to assist where possible in trying to resolve these.

"We are also supporting the work of the Eskom Technical Task Team that was appointed by the Minister of Public Enterprises, Pravin Gordhan," said Tshabalala.

Anglo American Platinum, meanwhile, on Tuesday afternoon issued a shareholder notice ahead of a briefing to investors on production guidance for the years up to 2022, saying that production could be impacted by power outages. 

Impala Platinum spokesperson Johan Theron told Fin24 by phone on Tuesday that it stopped production on Monday night and again on Tuesday morning. 

"Things seem to have stabilised throughout the day," Theron said. Implats expects to be able to resume underground operations from Tuesday night. 

Metals and engineering industry

The manufacturing sector is also expected to take a knock, according to the Steel and Engineering Industries Federation of South Africa's economist Marique Kruger.

In the long run, increasing electricity costs and load shedding are expecetd to slow down production, growth and  employment while increasing product selling prices. This, said Kruger, may result in a decline in exports and poor export competitiveness. The broader manufacturing sector contributes 12% of the country's GDP, she noted. 

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