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| Industries have been hit hard by the frequent power outages |
JOHANNESBURG, 28 January 2008 (IRIN) - Production in most South African mines - which include some of the world's biggest producers of gold and platinum and are the backbone of the country's economy - has been brought to a halt by recurrent power outages, sparking concerns over possible job losses.
"The mining industry is losing about R300 million [about US$42 million] a day as a result of the shutdown," said Mike Schussler, a leading South African economist. He warned that the stoppage had already begun to slow the economy, which would have a long-term impact on government's goal to halve unemployment and poverty by 2014.
The mines were forced to cease operating when the country's power utility, Eskom - still unable to keep up with demand after two weeks of nationwide rolling blackouts - asked its industrial customers to cut their power consumption by 10 percent.
The entire country has been hit by widespread planned and unplanned load shedding, affecting every sector of the economy. Eskom has blamed the outages on heavy rain in the coal-producing parts of the country, which it said had affected the quality of coal required for its coal-fired plants, and a breakdown in several of its key electricity generating plants.
Eskom spokesman Tony Stott told IRIN that asking the industrial sector, including the mines, to cut down consumption was "a temporary measure", yet it could not guarantee a normal power supply for the next five to eight years. "There is going to be a high risk of load-shedding until 2012, when two new power plants will become operational."
 There is going to be a high risk of load-shedding until 2012, when two new power plants will become operationa |
Any job losses in the mining sector could have an impact on the South African Development Community (SADC), warned Lesiba Seshoka, spokesman for the National Union of Mineworkers (NUM). South African mines employ 460,000 workers - 40 percent of them from neighbouring countries - and shutting down operations had already affected the incomes of casual workers.
One of the world's largest gold producers, AngloGold Ashanti, confirmed that it had stopped production and was sending workers underground only for maintenance and to ensure the workplace was kept safe.
Alan Fine, a spokesman for AngloGold Ashanti, said while it was "too premature" to consider retrenchments, the shutdown would have an impact on the production bonuses and overtime earnings of workers.
South Africa's economy needs to grow at least 6 percent annually to keep unemployment from rising above the official estimate of 25 percent, although independent economists have put the joblessness rate at nearer to 40 percent.
According to Schussler, economic growth could slow from over five percent in 2007 to three percent in 2008 as a result of the outages and anticipated slower growth in the global economy. The South African economy is the most influential in the region, and any contraction could have a ripple effect on neighbouring countries.
Even after industry has cut its consumption by 10 percent, South Africa still needs a minimum 32,000MW of power, while production is about 39,000MW, according to Eskom's Stott. According to generally accepted international standards, a country should consume 20 percent less than its capacity so as to have a reserve available.
Eskom expects to be able to generate another 2,000 MW by 2009, when it will have refurbished two mothballed plants and a new plant will come into operation. Two major power plants - one with 4,800MW capacity - will become operational by 2012 and are being billed by the utility as the answer to all the country's power problems.
But by then investor confidence in the economy will be shot, Schussler said. "Besides the big mining companies, some of the biggest losers are the small businesses, who are facing severe losses." He pointed out that gross domestic product losses, which take into account manufacturers and suppliers of equipment to mines, were estimated at about R200 million (about US$28 million) a day.
Eskom's Stott said the utility was appreciative of the concerns over the long-term impacts on the economy and had asked businesses to invest in generators.
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