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Pin to quick picksPetra Diamonds Share News (PDL)

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UPDATE 2-South Africa's mines close as flooding exacerbates power crisis

Tue, 10th Dec 2019 09:46

* Power crisis at state firm Eskom damaging economy

* Miners including Harmony, Impala Platinum, Sibanye hit

* Energy-intensive deep mines forced to halt production
(Adds details of companies affected)

By Helen Reid

JOHANNESBURG, Dec 10 (Reuters) - Mining operations across
South Africa are shutting down after flash flooding caused the
largest 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
whole neighbourhoods, leading to mass evacuations and
aggravating problems at state-owned utility Eskom, which has
been struggling to keep the lights on since 2008.

Harmony Gold, Impala Platinum, and
Sibanye-Stillwater all said they had been forced to cut
production since Monday owing to power shortages.

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

The mining industry contributed 350.8 billion rand ($23.85
billion) to the South African economy in 2018, according to the
Minerals Council, around 7% of gross domestic product (GDP).

Eskom on Monday cut up to 6,000 megawatts (MW) of power from
the national grid after heavy rain and flooding triggered
failures at its 4,800 MW Medupi coal fired plant.

It said on Tuesday it planned more load-shedding - a South
African term for planned power cuts - but added the crisis was
manageable.

"The ongoing load shedding is devastating for the country
... causing our economy great harm and disrupting the lives of
citizens," President Cyril Ramaphosa said in a statement on
Tuesday. "The energy challenges in this country will not be
resolved overnight."

'MANAGEABLE CRISIS'

Harmony Gold called off its underground shifts, saying they
would resume as soon as Eskom could provide assurances the power
supply would be more reliable, while Impala Platinum stopped
production at its Rustenberg and Marula mines after it was left
functioning at 20%-30% of normal power.

It later added that losses already amounted to 120 million
rand.

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

Anglo American said its operations had been
affected but gave no further details. The company mines coal,
diamonds, iron ore, and platinum in South Africa through its
businesses De Beers, Kumba Iron Ore and Anglo American
Platinum.

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

A Gold Fields spokesman said the impact on its
South Deep mine has been 'limited' so far, but prolonged power
cuts at the current frequency would present challenges.
Petra Diamonds Ltd said on Monday it was in the
process halting operations at its Cullinan, Finsch and
Koffiefontein mines in South Africa after Eskom asked the miner
to reduce its electricity load.

"The outlook for this week is to maintain load shedding
because of the weather, because of the coal handling challenges
that we've got," Eskom's chief operations officer Jan Oberholzer
told the eNCA news channel, adding that a number of production
units were also broken down.

"We believe it is a manageable crisis," Oberholzer said.
"Four thousand megawatts of the problem we had yesterday was due
to flooding."

South Africa's GDP shrank 0.6% in the third quarter, the
second contraction this year, partly in response to the power
supply uncertainty, and the country is on the verge of losing
its last investment-grade credit rating.

($1 = 14.7075 rand)

(Writing and additional reporting by Tim Cocks in Johannesburg.
Editing by Jane Merriman and Kirsten Donovan)

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