Published January 25, 2008
CAPE TOWN, South Africa – Leading South African gold and platinum mines stopped production Friday as the government declared a national electricity emergency in the face of power outages that have caused chaos and threatened to choke economic growth.
The government said there was no foreseeable end to the electricity shortages that have spilled over the nation's borders into Botswana and Namibia, which rely heavily on South African energy exports.
"The unprecedented, unplanned power outages must now be treated as a national electricity emergency situation that has to be addressed with urgent, vigorous and coordinated actions," Public Enterprise Minister Alec Erwin told journalists after a Cabinet meeting.
"We are viewing the next two years as being critical," he said, as government officials unveiled a package of measures, including rationing, price hikes and a massive push for alternative energy.
The crisis reached new heights Friday when mining companies including AngloGold Ashanti Ltd., Harmony Gold Mining Co. Ltd. and Gold Fields Ltd. suspended all but emergency operations on some of the world's largest gold mines out of fear that power cuts would trap workers underground. The stoppage may add up to hundreds of millions in losses for one of South Africa's most important industries and fracture investor confidence that is already rattled.
Gold Fields — whose South African operations produce 7,000 ounces of gold per day — said state utility Eskom had warned the disruption could last up to four weeks. Eskom asked mines to cut electricity consumption by 60 percent per month.
The cutbacks come as gold hit record highs this month.
The trade union Solidarity published a "Black Friday scorecard" of worst hit industries. Topping the list was gold, platinum and coal mining. It said that BHP Billitons manganese mines were closed and electricity supplies to three aluminum smelters was discontinued. Samancor Chrome, the worlds second largest ferrochrome producer, is planning to close its plants, it said. Ferrochrome is used to produce stainless steel and most of that is produced in South Africa.
Rolling blackouts in South Africa have begun to arrive without warning.
Nearly forty people were trapped in a cable car in high winds for two hours this week at Table Mountain, a tourist destination that overlooks Cape Town.
Some climbed through the roof to escape to a loading dock more than 2,000 feet above ground. Hundreds more were stranded at the top of the mountain.
"The knock-on effect on Cape Town is immeasurable," said Simon Grindrod, a Cape Town city councilor. "A headline today is lost business tomorrow."
The South African Tourism Services Association said the crisis is jeopardizing soccer's World Cup games, to be held in South Africa in 2010.
Erwin said measures taken over the next two years would help ease pressure on supply ahead of the World Cup.
"There is no threat to the successful holding of the event," he said.
The government and Eskom say South Africa's economic growth has outstripped energy supplies and the nation must cut use by 10 percent to 15 percent. The government has acknowledged for the first time it shares some blame for ignoring a 1998 Eskom report warning of a serious energy crisis within 10 years. The government approved a new power station building program in 2004.
Erwin said the government, however, will not freeze planned electricity-gobbling industrial projects, like a big new aluminum smelter, as had been suggested by Eskom.
Minerals and Energy Minister Buyelwa Sonjica said South Africa, which has until now relied heavily on its cheap and abundant coal for electricity, would put more effort into developing renewable energy. The government was also considering emergency measures to compel South African mines to supply Eskom with more and better coal rather than exporting it.
"If they don't give us the coal, they don't get the electricity," said Erwin.
Minister Sonjica said the government is studying countries like Brazil and Cuba that have been forced to ration energy. South Africa is now considering quotas, with fines for exceeding allotted energy use, Sonjica said.
Sonjica also said the government hoped that a million solar water heaters would be installed in the next three years and that measures were being considered to oblige hotels, hospitals and other institutions to use solar power.
Traffic lights may soon rely on solar power as well. Cape Town has pioneered a successful experiment, helping to minimize traffic snarl-ups now being caused by signal failures.
Electricity prices, which are expected to rise 14 percent this year, will likely continue to rise by a similar margin for the foreseeable future, said Erwin.