Johannesburg - South African platinum producers said on Friday they were
confident there would be sufficient electricity to power their mines
this month, despite utility Eskom noting a higher risk of outages on its
already volatile system.
The spot platinum price jumped to
four-week highs this week after Eskom said supply of electricity would
be extremely tight this month as the power firm took down more plants to
conduct overdue maintenance.
Eskom said the risk of blackouts
was higher, but there were none planned for now, and miners in a country
home to four-fifths of the world’s platinum reserves said they were not
overly concerned.
“We don’t foresee any problems at this point
in time,” said Alice Lourens, spokesperson for Impala Platinum, the
second-largest producer of the metal used in autocatalysts.
Four
years ago South Africa’s grid nearly collapsed, forcing mines and
smelters to shut for days and costing Africa’s biggest economy billions
of dollars in lost output. Eskom has since invested heavily to build new
plants and plug the shortfall.
Supply will remain vulnerable
until the first units of the new plants come online in 2013, but
analysts and industry say Eskom is now better prepared to manage a
volatile system.
Insufficient stockpiles of coal, used to power
85% of Eskom’s plants, were one of the main problems in 2008, but the
utility has since kept a healthy 42 days’ supply.
Razor-thin marginEskom
is also urging consumers to conserve power while it operates on a
razor-thin margin, especially as it steps up maintenance to improve the
performance of its power stations.
On Monday the difference
between peak demand and available capacity was a tiny 460 MW, mainly due
to maintenance and unplanned outages, although the situation has since
improved.
“The likelihood of load reduction requests is low. The
high alert from Eskom on Monday was due to three generating units
tripping within a short space of time. This is uncharacteristic and does
not happen every day,”
Anglo Platinum [JSE:AMS] the biggest producer,
said in response to questions.
Since the 2008 crisis, miners and
other industries have been asked to cut their demand voluntarily by up
to 10% and there is discussion about making the scheme mandatory.
That also means miners may not be the first to be asked to cut
demand in case of a crisis, although mining and other industry make up 40% of South Africa’s total demand for power.
“The risk of Eskom cutting electricity supply to mines should fade
and so should any (price) rally that found support in that risk,” said Standard
Bank analyst Walter de Wet.
Still, miners said they were on alert and were prepared to act, if
necessary, and would seek to minimise the impact.
Anglo Platinum said, if needed, it would first cut usage at its
smelters and concentrators, suggesting that mining would not be severely
affected as long as the power cuts were short-lived.
Aquarius Platinum [JSE:AQP] would be less exposed than its peers as it does
not have a smelter and sells platinum group metal concentrate to be refined by its bigger rivals.