Power crisis halts South African mines for a second day

JOHANNESBURG, SOUTH AFRICA - A power shortage halted production in South Africa's lucrative mining sector for a second day, and mining company officials said they still did not know when they could resume operations.

Power cuts described by President Thabo Mbeki's government as a national emergency stopped production in the world's biggest platinum and No. 2 gold producer, helping send prices in those metals to record highs and denting South Africa's rand.

"Nothing has changed," said Amelia Soares, a spokeswoman for gold producer Harmony, one of the bigger miners that normally carry out underground mining on weekends.

Soares said mining companies were in a meeting with the state utility Eskom to try and resolve the crisis. Eskom says the countrywide power shortage could last up to four weeks.

For weeks, homes have been plunged into darkness for up to eight hours a day, businesses have been disrupted and accidents have been reported as traffic lights failed, leaving many in Africa's biggest economy infuriated with their government.

The government, distracted by a power struggle in the ruling African National Congress, is facing growing criticism for underinvestment in power generation but has assured investors and the public that healthy economic growth could continue with voluntary cutbacks in energy consumption.

The crisis would not threaten the country's ability to host the 2010 football World Cup, officials have said.

But analysts say South Africa's booming economy, which hit a near three-decade high at 5.4 percent in 2006, could slow down and chided the government for failing to heed warnings years ago from Eskom ESCJ.UL to invest in new power plants.

"To close down our gold and other mines at a time when world stock markets are jittery and investors are seeking refuge in precious metals smacks of insanity," The Star newspaper said in a recent editorial.

"The knock-on effects of this decision could be vast. It could have massive implications for our economy, already buckling under the weight of an unreliable power supply, rising inflation and the spectre of more job losses."

The acute power shortage came about after Eskom, which relies on coal-fired power plants for more than 90 percent of its electricity supplies, took down some power plants for routine maintenance, normally conducted during the summer.

But unforeseen breakdowns at other plants, and unusually heavy rains have made a huge chunk of its coal stockpiles wet and unusable, which cut power output even further.

Eskom plans to invest 300 billion rand (21 million pounds) in power generation and infrastructure over the next five years, when it expects the power supply to meet demand.

Also hit by the power cuts are South African operations at De Beers, the world's top diamond producer, AngloGold Ashanti, Gold Fields, and the world's No. 1 platinum producer, Anglo Platinum.

"We are concerned. If this goes on too long our workers will miss production bonuses, marginal mines may shut down and even at big firms jobs may be affected," said Frans Baleni, General Secretary of the country's biggest mines union, the National Union of Mineworkers.