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South African miners seek private power options as Eskom suffers outages

The Minerals Council of South Africa, a trade group representing mining companies, has asked the nation's government to allow miners more flexible access to electric power supplies, saying recent power curtailments by state-owned power generator Eskom Holdings SOC Ltd. have had a devastating effect on the mining sector.

Power outages caused by heavy rains and flash flooding have forced some South African mining companies to shut their underground mining operations and processing plants for up to a day. Mine sites owned by Harmony Gold Mining Co. Ltd., Impala Platinum Holdings Ltd., AngloGold Ashanti Ltd., Gold Fields Ltd., Petra Diamonds Ltd. and South32 Ltd. are among those that have been affected.

Minerals Council CEO Roger Baxter said in a Dec. 12 statement that the government needs to urgently amend mining regulations to make it possible for companies to procure power directly from independent power producers without having to go through Eskom and to use self-generated power from the mines without requiring a license from regulator NERSA as is presently the case.

"The impact of stage 6 and stage 4 load shedding is devastating for the mining sector, as most mining companies will not only lose their week’s production, but that this affects the viability of many of these mines," said Baxter.

The council estimates that some 869 MW of solar power and up to another 800 MW of conventional power could be added to the national grid by mining companies over the next three to four years, with more available from other energy-intensive sectors.

"We can clearly see that over the past 12 years, despite hundreds of billions of rand funded through much higher electricity prices and substantial tax payer funded bailouts, that Eskom is in an even worse position and this is having a materially deleterious impact on the economy and mining in particular. We urge government to take decisive steps not only to fix Eskom but also to enable the private sector to bring on stream substantial self-generation capacity," Baxter said, adding that these plants would not cost the government anything and would give Eskom time to fix its operations.

The last time the mining industry was hit as hard by power outages was in 2008 when the country experienced rolling blackouts as Eskom suffered operational problems.

Specialist alloy producer Afarak Group PLC announced Dec. 9 that operational expenses caused by Eskom outages contributed to its decision to close two of its South African operations.