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Power shortages cut bullion output

SIBANYE Gold said yesterday power shortages and a delayed start-up after the festive season cut its first quarter bullion output by 5%, sending its shares lower.

Africa's number three gold producer said gold output for the three months to the end of March fell to 9808kg from 10338kg a year earlier. State-owned utility Eskom has been struggling to keep the lights and mining companies, among some of the heaviest power users, have had to cut consumption by up to 20%.

Sibanye said gold production fell due to agreements to reduce power consumption. The company said in February that it would build a R3-billion solar-powered power plant to weather power shortages.

Sibanye, however, kept its forecast for full-year production unchanged at between 50000kg and 52000kg. The company, along with industry rivals AngloGold Ashanti, Harmony Gold and Village Main Reef, is set to begin tough wage negotiations in the next few weeks with labour unions.

Sibanye cautioned against "inflated wage and benefits increases" which it said will impact the sustainability of the industry.

"While delivering short-term gains for employees and unions, [inflated wage increases] will result in the loss of jobs and destroy value for all stakeholders in the longer term," it said.

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