Not enough power at mines to send workers safely underground
Most of SA’s underground mines suspended work for a second shift due to uncertainty about electricity supply from Eskom, which is struggling to keep its power plants operational.
On Monday night, SA’s gold, platinum and diamond underground mines were forced to suspend operations because of an unprecedented reduction of 6,000MW by the state-owned power monopoly as technical issues and heavy rain affected its plants.
As the constraints eased on Tuesday morning, with Eskom reducing its cuts to 4,000MW, most underground mines opted to keep tens of thousands of underground workers on the surface rather than risk having them trapped underground.
Harmony Gold extended stoppages at its nine mines on Tuesday after Eskom asked the mining industry to curtail electricity consumption.
“We will resume shifts as soon as Eskom is able to provide us with the assurance that power supply will be more reliable,” said Harmony CEO Peter Steenkamp.
Impala Platinum kept its day shift on the surface doing health and safety drills rather than to send them underground, said spokesperson Johan Theron. He noted that the day shift usually went underground early in the morning and it was not clear at that point what the outlook for power supply was.
INSUFFICIENT SUPPLY
Implats, the world’s third-largest source of mined platinum, normally uses 400MW at its Rustenburg mines, which are the heart of the company.
When stage 6 load-shedding was introduced on Monday evening, electricity supply to Implats was cut to 55MW, allowing the company to keep essential parts of its business working, but not enough to allow for hoisting ore, milling, concentrating or smelting.
The supply was raised to 105MW on Tuesday morning, still insufficient for Implats to feel comfortable about sending its workforce underground. During the day, electricity supply was raised to 280MW, and the company was to send the night shift underground on Tuesday night, Theron said.
Sibanye-Stillwater, the world’s biggest platinum miner and second-largest source of platinum group metals, as well as a major source of SA gold, also shut its mines overnight on Monday and did not send the morning shift down at 4am.
Sibanye was due to send the afternoon and night shifts underground because Eskom had returned to stage 4 loadshedding, under which it was providing enough power to operate the mines and limited surface infrastructure, said spokesperson James Wellsted.
AngloGold Ashanti, which is selling its last remaining SA mine, Mponeng, the world’s deepest at 4km below ground, also kept workers on the surface on Monday night.
“We complied with the loadshedding requirements yesterday with minimal production impact,” said spokesperson Chris Nthite.
“Today [Tuesday] Mponeng is operating, and we are complying with the stage 4 load curtailment requirements. We are able to switch off some of the less critical loads without major impact on safety and operations,” Nthite said.
“These entail shedding surface mills that process marginal material and underground measures including reductions in pumping and rock hoisting. It is still early days to determine production impact at this stage.”
BIG INVESTMENTS
On Tuesday Merafe Resources, a junior empowerment partner in a chrome joint venture with Glencore, warned its shareholders that stage 4 and stage 6 loadshedding, alongside the challenging economic environment, “is expected to have a negative impact on the future economic viability of some of the company’s operations and the wider ferro alloys sector in SA”.
Through its chrome business, which operates five ferrochrome smelters, 22 ferrochrome furnaces and eight mines, Merafe said it has made big investments over the last 10 years to modernise the operations in the face of rising operating and employment costs, worsened by the recent introduction of a carbon tax.
“The business continues to engage with all stakeholders to determine what measures can be implemented to help alleviate the significant external pressures facing the industry,” it said.
Anglo American Platinum (Amplats), the world’s secondlargest platinum miner, declined to be specific about the operational consequences of Eskom’s limited power supply apart from acknowledging that its operations have been affected.
Amplats’s Mogalakwena opencast mine, the world’s most profitable platinum mine, will be barely affected by the electricity shortage as it does not need hoisting, cooling and ventilation as underground mines do.
ALTERNATIVE SOURCE
However, its processing plants will probably have to adjust production in line with most in the industry. The company has kept its full-year production target intact at between 2-million ounces and 2.1-million ounces of platinum.
The power cuts by Eskom will give renewed impetus to companies such as Sibanye, Amplats, Gold Fields and Harmony to secure regulatory permission for alternative sources of electricity.
Most large mining companies have submitted applications for large solar arrays to supply their operations, providing clean, cheap power as SA now faces carbon taxes and rapidly rising electricity costs.
The Minerals Council SA has stated that electricity prices have increased 523% since 2006, with a further 30% rise forecast over the next three years.
‘This because as Eskom will have to contend with R450bn of debt; ageing plants; poorly considered plans to purchase coal from small mining companies and traders rather than large, dedicated mines; and variable quality coal.
Mining companies said it is impossible to estimate the cost of the shutdowns because it is unclear how long the constrained power situation will last and how severe it will be, and what the ability is to treat stockpiled material.