South Africa electricity crisis shuts gold mines

Gold mines were forced to stop production in South Africa today hit by nationwide power cuts.

The blackouts, caused by demand outstripping supply from power stations, are causing chaos and misery and threatening economic growth.

The government announced emergency plans to deal with the cuts that have undermined confidence in the country, with incidents like the stranding of hundreds of people on Table Mountain's cable car earlier this month.

They are also conscious that in two years they risk international humiliation if the failures still exist when South Africa hosts football’s World Cup.

Public Enterprise Minister Alec Erwin said: “We are viewing the next two years as being critical,” unveiling plans for rationing, price hikes and a massive switch to solar power.

The crisis reached a new peak today when mining companies including AngloGold, Harmony and Goldfields suspended virtually all operations for fear power cuts would trap workers underground.

The stoppage is likely to cost hundreds of millions of pounds to one of South Africa’s most important industries and shatter already shaky investor confidence.

Goldfields said Eskom, the state utility, had said the disruption could last up to four weeks after Eskom asked mines to cut electricity consumption by 60% per month.

What most angers business and consumers alike is that the rolling blackouts come without warning and so are particularly crippling.

Nearly 40 people were trapped in a cable car in high winds for two hours and hundreds more were stranded until after midnight on the top of Table Mountain earlier this month. Simon Grindrod, a Cape Town city councillor, said that this could have been avoided if Eskom had just given 10 minutes warning.

“The knock-on effect on Cape Town is immeasurable,” he said. “A headline today is lost business tomorrow.”

The South African Tourism Services Association said earlier this week that the crisis jeopardised the hosting of the World Cup in 2010.

“Stadia may have all the most wonderful generators in the world to broadcast the games, but will people come to SA to see them if they know they will be going back to hotels and guest houses with no power? That means no hot meals, no clean laundry, no lights,” said the tourism association’s Michael Tatalias.

Erwin said measures over the next two years would help ease pressure on supply ahead of the World Cup.

“There is no threat to the successful holding of the event as plans to ensure electricity supply in that period are well advanced,” he said.

The government and Eskom say that demand for electricity in the buoyant economy has simply grown too fast to cope and now needs to be cut by 10-15%.

But - for the first time – the government acknowledged it should share in the blame by ignoring a 1998 Eskom report warning of a serious energy crisis within 10 years. The government only gave the go-ahead to a new power station building program in 2004.