The latest out of SA indicates that gold production was down 16.5% in January. This shows that the Eskom power outages are having a major impact on mine production and further improves the fundamentals for precious metals.
Mining Production Is Hard Hit By Electricity Supply Shortage
Mining Weekly
By: Sylvester Haskins
Published: 4 Apr 08 - 0:00
The mining production output for January 2008 was down 10,7% when compared with figures for the same month last year, owing largely to the electricity supply crisis that led to mine shaft closures, with gold production in particular feeling the effects of these closures, reports Statistics South Africa (Stats SA).
Stats SA reports that gold production decreased by 16,5% for January 2008, compared with figures for the same month last year.
Further, gold production after seasonal adjustment decreased by 5% for January 2008 when compared with figures for December 2007.
The total mining production for the three months ended January 2008, after seasonal adjustment, decreased by 3,9% compared with figures for the previous three months.
The 3,9% decrease was owing to a decrease of 9,2% in the production of gold, and a decrease of 3% in the production of nongold minerals.
The Chamber of Mines (CoM) reports that the mining production figures, provided by Stats SA, demonstrate the significant impact that the electricity-induced outages have had on the mining sector.
“On a year-on-year basis, the physical volume of mining production declined by 10,7% in January 2008, led by large declines in production from the large deep-level mines in the form of a 16,5% decline in gold production, and a 15,9% decline in platinum-group metals production,” says CoM CEO Mzolisi Diliza.
He says that the total mining production, on a year-on-year basis, increased by 1,7% in January 2007, which illustrates the extent of the 10,7% decline recorded in January 2008.
“The impact of the decline in mining production has already been felt in the export numbers, with South Africa’s trade deficit rising to R10,2-billion in January,” states Diliza.
He says that the electricity crisis hit the mining industry hard from January 25 to January 31, when most of the sector was effectively shut down.
“In the subsequent Eskom stabili- sation period, the mining industry, combined with Eskom’s other large industrial customers, agreed to reduce demand by 10% to help Eskom stabilise the network,” states Diliza.
He says, however, that the consequences of the late January shutdown, and the curtailment of electricity supply to 90% of normal demand, have had a most deleterious impact on the large deep-level mines.
Diliza says that the impact on production has generally been greater than the reduction in electricity supply at the deep-level operations.
