September 08, 2008

Eskom may declare force majeure on power supplies to mines

Reuters reported that South African power utility Eskom may have to inform mines in the world's biggest platinum producer of a force majeure if more of its generators trip.

The report quoted Mr Andrew Etzinger a spokesman of Eskom as saying that "At the moment we are in a very tight situation. If we lose an additional two generators in the course of this morning we could possibly once again be in a force majeure situation.” He added that "It's really critical at the moment."

Mr Etzinger said nine generators had tripped and another nine were down for planned maintenance. South Africa's power crisis follows years of underspending by Eskom on electricity generation capacity. Three generators were expected to be back in service on Tuesday, he said. "Until such time as those three come into service we're extremely vulnerable."

Mr Etzinger said the problem was compounded by persistent rain in Mpumalanga province where coal mines and the utility's coal fired power stations are concentrated. Wet coal is difficult to handle. He added that "This is a growing concern as well, both in terms of the coal mines as well as our power station operations. This is adding to the problem.”

He said mining companies are aware of the situation.

South Africa's electricity grid came close to collapse in January, forcing the government to declare a national emergency. Gold and platinum mines were forced to shut down for five days. Since then mines have been operating below full power, driving up precious metals prices and raising fears of possible job losses and slowing growth.