Power Cuts Risk Output as African Miners Gather in Cape Town

Mining companies in South Africa risk missing output targets because of the largest power-plant breakdowns in three years, the biggest mines lobby said.

The regularity of cuts is making it difficult for companies to remain flexible and work around them, said Roger Baxter, chief operating officer of the Chamber of Mines.

“Some of the companies have already indicated that they’re constrained,” Baxter said by phone on Thursday. “No doubt some of it is affecting production.”

Eskom Holdings SOC Ltd., the utility that provides 95 percent of the nation’s power, rationed supply for a fourth straight day on Friday. Its aging plants are breaking down more often and the startup of new capacity has been delayed by construction issues and labor unrest. The country is the world’s no. 1 producer of platinum, the sixth-largest of gold and seventh-biggest of coal.

Rotational blackouts are becoming too frequent for the largest users to plan their production processes, said Shaun Nel of the Energy Intensive Users Group of Southern Africa, whose members include the local units of BHP Billiton Ltd.

The industry will meet in Cape Town next week for the annual Investing in African Mining Indaba, the continent’s largest such gathering, where power constraints will form part of discussions.

Plant Breakdowns

Eskom said 37 percent of its installed generating capacity of 41,995 megawatts was offline on Thursday, the most since it started providing twice-weekly data in January 2012. Of that, unforeseen plant breakdowns comprised 10,424 megawatts, or more than its two biggest facilities are able to provide, while maintenance accounted for 5,043 megawatts.

While demand is expected to decrease over the weekend, the outlook “is not looking good” and Eskom may have to continue rolling blackouts, Khulu Phasiwe, the utility’s spokesman, said by phone.

The company requires as much as 5,000 megawatts of capacity daily until at least the end of April to cover the gap created by planned maintenance on generation plants, Eskom said on Jan. 15.

“Unplanned outages are beginning to increase, so we’re in a really, really tight situation,” Nel, a spokesman for the intensive users’ group, said by phone on Thursday of mines, smelters and other large industrial users. “It is definitely impacting production.”

The country’s largest gold producers have since 2008 shifted 500 megawatts of consumption to off-peak periods, Baxter said.

Disrupting Operations

Load-shedding, as rolling blackouts are locally known, is disruptive even though it hasn’t affected production at Sibanye Gold Ltd., South Africa’s largest producer, spokesman James Wellsted said by phone. It may affect output if Eskom requests the company to reduce demand by as much as 20 percent for an extended period of time, Wellsted said. The company has developed a system with Aggreko Plc for 2 megawatts of generation from methane gas produced during mining, it said in a statement on Friday.

Harmony Gold Mining Co., the third-biggest local producer of the metal, will comment on power problems when it releases second-quarter results next week, spokeswoman Marian van der Walt said by phone.

Eskom usually asks the biggest users to reduce consumption by at least 10 percent before it cuts supply to other consumers such as households and retailers, Baxter said.

Indaba Spared

Almost 7,000 attendees are expected at next week’s Mining Indaba. The top executives of the biggest companies from Glencore Plc to Rio Tinto Plc will probably be spared the brunt of rolling blackouts as the city excludes any venue where big crowds gather from cuts, Ernest Sonnenberg, mayoral committee member for utility services, said in an e-mailed response to questions.

The period of Feb. 9 to Feb. 12 has a “high probability of load-shedding,” Eskom said in a Jan. 15 presentation.

Other areas and amenities excluded from rotational power rationing include hospitals and the Table Mountain cable car, parts of the central business district and at times the Victoria & Alfred Waterfront, a harbor precinct with shops, offices and hotels less than a mile (1.6 kilometers) from the main convention center, Sonnenberg said.

The event’s organizers will install backup generators and battery units for emergencies, Jonathan Moore, managing director of Mining Indaba LLC, said by phone.

“My hope is that it won’t be a major issue but we are amply protected,” Moore said. “Somehow or the other you always make it work.”

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