Mines are facing winter blackouts

Lucky Biyase | April 28 2013 | Business Day

ALREADY battered by wildcat strikes and a turf battle between the National Union of Mineworkers and its upstart rival, the Association for Mineworkers and Construction Union, the mining industry faces another uphill battle with electrical shortages.

As the winter demand peaks, Eskom is expected to do unplanned maintenance work on its power stations, which will see about 25% of the power utility’s capacity being unavailable, resulting in load shedding.

Mining industry output surprised many in the first two months of the year, with a better-than-expected performance, growing by 6.7%, according to data from Stats SA.

Early this month, Chamber of Mines CEO Bheki Sibiya said while the lights are still burning for residential users mines are experiencing power outages.

On Friday, Vusi Mabena, senior executive for transformation and stakeholder relations at the chamber, said there is a big problem with the supply of electricity in terms of quality and continuity. The chamber is engaging Eskom at senior level about this.

However, Mr Mabena said that since the demand reductions of 2008 most mines have adapted to constraints by closing sections and restructuring operations.

“Although revenue was affected negatively, the impact has largely been absorbed. Most large underground mines have emergency generators that will enable the mine to maintain rudimentary ventilation and evacuate the underground personnel,” said Mr Mabena.

Shaun Nel, programme manager at the Energy Intensive Users Group, which is responsible for about 40% of electricity consumption, urged all users to focus on conserving energy usage.

“Space has to be created to allow Eskom to effect maintenance on its plants to avoid the high number of breakdowns. Critically, we need Medupi power station to deliver power on time in 2013 to avoid significant power shortages into the future,” said Nel.

Warren Beech, director and head of mining at Routledge Modise Attorneys, said the mining industry places significant demands on Eskom.

Inefficient technology and processes at older mines significantly increase this demand as they require substantial capital investment to refurbish and replace.

“Power outages impact directly on the ability to mine and on beneficiation,” said Mr Beech.

“Key aspects, which also impact on health and safety such as ventilation, cooling, refrigeration and lighting, cannot be supplied where there are power outages. Production simply cannot continue.

“Unexpected power outages can render the mines unsafe and, in worst-case scenarios the mines cannot transport employees from the workings, particularly through the winders and hoists, by means of the shafts.”

James Maposa, programme manager for industrial automation, mining and manufacturing at Frost and Sullivan, said electricity shortages have a significant bearing on growth in output of the domestic mining industry.

He said if blackouts have already started within the deeper level mines, the mining sector should brace itself for low output growth in the second quarter.

“With gold accounting for the majority of the country’s deeper level mines, the sector will be most affected by the blackouts. Other mining sectors that are expected to face the electricity shortage pinch include the platinum group metals, coal and base metal mining sectors, who are all working on ramping up their respective capacities to return the industries to their former glory,” he said.

Mr Maposa suggested renewable energy as something mining companies should pursue.

“Unfortunately this will not solve the sector’s pending short-term electricity shortages. Re-engaging Eskom to get guarantees of supply is the safest bet. The other option that could be explored in collaboration with Eskom is electricity imports from Mozambique,” he said.

Mr Beech said the mining industry has faced, and will continue to face, an unprecedented range of complex challenges. This includes reduced global demand for certain minerals, increased costs of production which are severely affected by steadily increasing costs of labour, loss of production arising out of strikes and increasing electricity costs.

“While the mining industry could possibly absorb and address the impact of certain of these challenges, the fact that these challenges have effectively hit the industry simultaneously has placed extensive pressure on various sectors of the industry which were already under threat,” said Mr Beech.

* This article was first published in Sunday Times: Business Times

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