Eskom backtracks on mine deal

2008-02-01 08:53

Johannesburg - Eskom has told Gold Fields, the world's fourth-largest gold producer, that it may not increase its electricity consumption to 90% of regular consumption and instead stick to 80%, which puts more of its shafts at risk.

"Gold Fields is disappointed to confirm that Eskom has informed the Company that authorisation to increase electricity load from 80% to 90% by this evening, has been temporarily withdrawn in order to 'protect further frequency decay and system instability'," Gold Fields said in a statement.

Gold Fields CEO Ian Cockerill said at a results presentation on Thursday that even at 90% power six of the company's 21 shafts were at risk and at 80% that number rose to nine.

Eskom told the mining sector on Tuesday power usage could be increased to 90% from Thursday evening, clearing the way to resume production, which was halted on 25 January when the monopolistic power utility declared force majeure on its power supply.

Gold Fields has said that with reduced power supplies, the shut down on Friday and the holidays during the three-month period to end-March, South African production would be down 20 to 25%, which translates to 164 250oz of lost output at the upper end of the estimate.

The lost ounces are worth more than R1bn at current gold prices.

- Fin24

Finance24