As the recent power cuts have re-entered the radar of all South Africans, it goes without saying that there will be certain repercussions to the South African economy and with no exception, the mining industry.
With the previous announcement of an ‘electricity emergency’ in 2008 that forced the world’s three largest mines – Anglo Gold Ashanti, Goldfields and Harmony – to evacuate underground staff and cease mining operations, naturally mining companies were left wondering what repercussions will be felt this time around.
Luckily mining companies know what to expect to a certain degree thanks to a deal struck in 2010 between Eskom and the industry that allows the mines to keep operating on reduced power.
However, this being the first real load shedding announcement since 2008, it is still uncertain what this arrangement will mean for the industry and its output. As experienced before the gold and platinum prices were sent to record levels having a plummeting effect on the rand.
Within the arrangement struck in 2010, Eskom is to give the industry notice to reduce their power consumption by between 15% and 20% when the national grid is at its tightest and unable to meet demand.
“If it’s a 15% or 20% reduction in demand and it goes on for an extended period, it can have quite a big impact,” said Sibanye spokesman James Wellsted.
For instance, concentrators are switched off and water pumps that would prevent underground dams from flooding are only turned on during low usage hours at night, he said.
Impala Platinum reduces its usage of power-intensive equipment, including furnaces, during national peak usage times when residential consumers are just waking up or have just returned from work, spokesman Johan Theron said. Going on to explain that shifting the energy-intensive work to an off-peak period in the middle of the night “is not ideal or sustainable, as it will impact the business over time in that wear on furnaces are accelerated under these operating conditions”.
With an undetermined level of repercussions, mines have to look at what measures they can put in place in order to reduce the impact.
Conscious of the need to facilitate energy conservation, Eskom developed a strategic approach to Demand Side Management. The main objective of this is to review which processes have the potential to produce energy saving opportunities for miners.
Alternatively mines have looked at the potential of producing their own power, an expensive and legally challenging task, it also undermines the volume of electricity consumption the industry consumes, thus making self-generated energy a near impossible task.
“We need to fix Eskom, to think that underground gold mining can survive without Eskom is going to be difficult,” said Peter Steenkamp, the chief executive of gold miner Harmony.
Few companies have succeeded when it comet to decreasing their dependency on the grid. Petrochemicals firm Sasol has done well to achieve the production of 70% of its electricity needs.
But companies such as Sibanye, Harmony Gold and Amplats are struggling to do the same.