South African mines grind to halt as floods deepen power crisis

By Helen Reid
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South African mines grind to halt as floods deepen power crisis

FILE PHOTO: Friends talk by candle light during load shedding in Embo

By Helen Reid

JOHANNESBURG (Reuters) - Mines across South Africa shut down on Tuesday after flash flooding triggered the most severe power blackouts in more than a decade, threatening a key export sector in a further blow to the country's already slowing economy.

Heavy rains across parts of South Africa have submerged entire neighbourhoods, leading to evacuations and aggravating problems at state-owned utility Eskom, which has been struggling to keep the lights on since 2008.

Harmony Gold <HARJ.J>, Impala Platinum <IMPJ.J> and Sibanye-Stillwater <SGLJ.J> all said they had been forced to cut production since Monday because of power shortages.

"There are very few underground mines that operated overnight and will be operating normally today," said a spokesman for the Minerals Council industry body.

The mining industry contributed 351 billion rand ($24 billion) to the South African economy in 2018, the Minerals Council says, equating to about 7% of gross domestic product (GDP).

Eskom said on Tuesday that it plans more load-shedding, referring to intentional power cuts, having cut up to 6,000 megawatts (MW) from the national grid on Monday after flooding triggered failures at its Medupi coal-fired plant.

The company's operations chief Jan Oberholzer told the eNCA news channel that the crisis was "manageable".

President Cyril Ramaphosa cut short a state visit to Egypt to meet Eskom officials, local news agency EWN said on Tuesday. The presidency did not immediately respond to a request for comment.

"The ongoing load shedding is devastating," Ramaphosa said in a statement earlier on Tuesday. "The energy challenges in this country will not be resolved overnight."

South Africa's cash-strapped state-owned companies have been a major headache for the president as he seeks to reverse years of economic stagnation.

South African Airways was placed in bankruptcy protection last week and an independent administrator was appointed to run the state's passenger rail company on Monday.

But loss-making Eskom, which generates more than 90% of the country's power, is the "most serious risk" to the economy, the Treasury says. This is largely because of its 500 billion rand of debt, mostly government-backed.

Credit rating agency Moody's has said Eskom's troubles endanger South Africa's only surviving investment-grade rating.


SHUTDOWNS

Energy minister Gwede Mantashe is considering short and medium-term interventions, such as pushing forward approval for new power-generation projects, to tackle the energy and electricity challenges, the ministry said in a statement.

But a ministry spokesman said that any measures would require approval from the electricity regulator, and there was not yet a timeframe for when the measures would be implemented.

Harmony Gold, meanwhile, called off its underground shifts, saying they would resume as soon as Eskom could provide assurances the power supply would be more reliable.

Impala Platinum stopped production at its Rustenberg and Marula mines after it was left functioning at 20-30% of normal power.

"We certainly can't risk any attempt at production with this level of power," a spokesman said.

The platinum miner later said that losses had so far amounted to 120 million rand.

Anglo American <AAL.L> said its operations had been affected but gave no further details. It mines coal, diamonds, iron ore and platinum in South Africa through its De Beers, Kumba Iron Ore <KIOJ.J> and Anglo American Platinum <AMSJ.J> businesses.

Sibanye-Stillwater <SGLJ.J> shut all its deep-level mines on Monday but was aiming to send miners back underground for the afternoon shift at 1400 GMT on Tuesday.

A Gold Fields <GFIJ.J> spokesman said the impact on its South Deep mine was limited, though prolonged power cuts would present challenges.

Petra Diamonds <PDL.L> said on Monday it was in the process of halting operations at its Cullinan, Finsch and Koffiefontein mines in South Africa after Eskom asked the miner to reduce its electricity load.

AngloGold Ashanti's <ANGJ.J> Mponeng gold mine was operating on Tuesday, with the company describing the impact of power restrictions on its production as "minimal".

South32's <S32.AX> two aluminium smelters, Hillside and Mozal, have had planned power outages in accordance with agreements with Eskom, a spokeswoman said, adding that the effect on output would only be visible in January.

($1 = 14.7075 rand)


(Additional reporting by Alexander Winning; Writing by Tim Cocks and Joe Bavier; Editing by Kirsten Donovan and David Goodman)