Miners WANT TO HELP ESKOM

SOUTH Africa's mining sector needs to work closely with utility Eskom to find ways of cutting power consumption in the face of planned steep rises in electricity prices, the head of Anglo American said.

SOUTH Africa's mining sector needs to work closely with utility Eskom to find ways of cutting power consumption in the face of planned steep rises in electricity prices, the head of Anglo American said.

Eskom, which provides 95percent of the country's electricity, wants to raise prices by 35percent a year for the next three years to help fund a R385billion power expansion programme.

"A number of the mining groups here today are both major suppliers to and customers of Eskom.

"Clearly none of us is in a position to sustain large electricity price increases year after year," Anglo chief executive Cynthia Carroll told the Indaba mining conference in Cape Town yesterday.

Anglo - which has the biggest mining interests among its peers in South Africa, in platinum, iron ore and coal - and other miners should work together with Eskom to reduce demand and come up with other sources of power, she said.

"This could entail seconding senior management to Eskom, as Anglo American has done ... [or] supplementing supply by generating our own electric power and pursuing non-electric technologies," Carroll said.

Harry Kenyon-Slaney, Rio Tinto's chief executive for diamonds and minerals, said the impact of Eskom's proposed tariff hike on businesses would be significant, and could lead to job losses and a reduction in mine life across South Africa.

Minister of Minerals Susan Shabangu said the government would try to mitigate the impact of power tariffs, but warned that the days of cheap power were over.

"[The] government is discussing how best to deal with the impact of a raise in tariffs.

"There is no intention by the government to try and destroy any sector, but unfortunately we need more electricity [through new investments]."

"The government has set up an advisory council to look at this issue, but the reality is that the days of cheaper electricity are over."

Critics say up to 500000 jobs could be lost if the electricity price hikes go ahead.

Gold producers say steep power price hikes would erode profit margins, while ferrochrome smelters fear rising costs may force them to cut output. - Reuters

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