Power cuts will affect mine output, warns body

Johannesburg - The Energy Intensive User Group (EIUG) has told Energy Minister Tina Joemat-Pettersson that further power constraints would lead to reduced mine output and plant closures, according to minutes from the meeting seen by Reuters.

The EIUG is an industry body which includes major mining companies operating in SA such as AngloGold Ashanti [JSE:ANG] and BHP Billiton [JSE:BIL].

The meeting, which took place on Tuesday, was between Joemat-Pettersson and members of the EIUG. The ministry noted the meeting in a statement on Tuesday, but provided few details about it.

READ: Fear of unforeseen Eskom system collapse

South Africa is currently facing its worst power crisis since 2008, when rolling power outages cost the mining industry in the world's top platinum producer billions of dollars in lost output and brought misery to retailers and households.

Eskom last Friday implemented rolling blackouts in some parts of the country, the first such power cuts this year, and has warned that more are certain as demand threatens to outstrip its capacity to keep the lights on.

Minutes from Tuesday's meeting obtained by Reuters show the minister indicated that she was exploring the idea of getting the private sector to reboot power plants mothballed in the past, such as those owned by local municipalities.

READ: No quick-fix for Eskom

On the subject of Eskom's precarious financial situation, she was quoted as saying that the utility was "burning cash faster than it is making it" and that the company needed to rein in costs.

Even with a R20bn cash injection from the government and permission to raise electricity tariffs, Eskom has said it needs more funds to ensure liquidity.

The minister also said the high cost of diesel to run Eskom's open cycle gas turbines was unsustainable.

An Eskom spokesperson said last week that if the cash-strapped utility was unable to purchase diesel supplies, it would lose 5% of its capacity and blackouts would then occur on an almost daily basis until the end of March.

Controlled power cuts are used to prevent a total collapse of the grid.

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