South African miners in desperate talks over power crisis

By James Macharia
Reuters
Sunday, January 27, 2008

http://africa.reuters.com/wire/news/usnL27262918.html

JOHANNESBURG -- South African mining companies were allowed to resume underground maintenance work on Sunday as a power crisis that has crippled the country's mining industry entered a third day.

But mineral extraction was still not permitted after a flurry of weekend talks and mining officials said it appeared that no production would be possible for a few more days.

The power crisis became a national emergency on Friday, stopping production in the world's biggest platinum and No. 2 gold producer, helping send prices in those metals to record highs and weakening South Africa's rand currency.

For weeks, homes and businesses have been dark for hours a day while failed traffic lights have caused accidents, leaving many in Africa's biggest economy angry at their government.

Authorities said the mines, some of the world's deepest, would get enough power to allow workers to pump out water and make them safe to operate when the crisis ends.

"This is a very positive step. Under the difficult circumstances it is big progress from Friday," said Willie Jacobsz, a spokesman for gold miner Gold Fields.

Amelia Soares, a spokeswoman at rival Harmony, said a meeting on Wednesday between mining firms, government officials and the state utility Eskom would determine how mines could start production. Mines would be asked to cut their power usage, officials said.

Eskom has said the crisis may last for up to four weeks.

Worried about output losses, mining group Anglo American's London-based Chief Executive Cynthia Carroll was travelling to South Africa to meet government officials.

The company has vast interests in South Africa, ranging from gold, coal, and platinum. Its majority-owned Anglo Platinum is by far the world's biggest producer.

"Obviously this is a very serious situation. We just can't have our operations shut down indefinitely," said Pranill Ramchander, a spokesman for Anglo.

"We want to know when we can start operations or discuss trade-offs to help us start mining. A decision was taken and Cynthia Carroll is coming to spearhead these talks."

President Thabo Mbeki's government, distracted by a power struggle in the ruling African National Congress, faces growing criticism for years of underinvestment in power generation.

The government promised healthy economic growth based on voluntary cutbacks in energy usage, and insisted that the crisis does not threaten South Africa's plans to host the 2010 soccer World Cup. But these assurances have met with calls for heads to roll.

"While Mbeki and his ministers have finally apologised, not a single official has been fired or has resigned over this 'national emergency,'" The Sunday Times said.

Analysts fear the booming economy, whose growth hit a near three-decade high at 5.4 percent in 2006, could slow down and say the government ignored warnings as far back as 10 years ago from Eskom to build new power plants.

The crisis started after Eskom took down some power plants for routine summer maintenance. But other plants have broken down and heavy rains have made coal stockpiles wet and unusable.

Eskom plans to invest 300 billion rand ($43 billion) in power generation and infrastructure over the next five years, and has warned the country to expect a bumpy ride until then.

Miners warned of the dangers if power is not restored.

"If some of the mines get flooded, you can't save them," said Jacobsz at Gold Fields, which says it is losing 7,000 ounces in output a day.

Partial power supplies would allow air to be pumped into mines that run as deep as 4km to cool rocks that can heat up to 70 degrees Centigrade. Support beams could be built and lifts repaired.

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