The South African government is to introduce electricity rationing, as the country's deepening power crisis forced the world's largest gold and platinum mining companies to shut down operations yesterday.The move to drastically cut power consumption came as the cabinet described a fortnight of rolling blackouts to millions of homes and businesses as a "national emergency" amid warnings that the electricity shortage will go on for years.
In an unprecedented move, the state power utility, Eskom, told the mines to evacuate all underground staff and cease mining to cut electricity consumption to "minimal levels".
The world's largest gold mine, Driefontein, near Carletonville, with 16,000 workers, was among those closed along with others owned by the world's three largest gold mining houses, AngloGold Ashanti, Gold Fields and Harmony. The two biggest platinum mining companies, which account for more than half the global supply, were also forced to cease production, driving precious metal prices to new highs with platinum rising nearly 5%.
Eskom has warned the mine closures could last for up to six weeks as it will only supply power at "survival level". It predicts that regular blackouts will continue for five years or more until new power stations are built.
Gold mining is a mainstay of the South African economy, contributing about 18% of GDP and employing hundreds of thousands of people. The opposition Democratic Alliance warned the crisis could have a "catastrophic" impact on the economy not only through mine closures but by hitting manufacturing and tourism.
Buyelwa Sonjica, the mines and energy minister, yesterday said the government would pass legislation introducing electricity rationing as a "quick hit" solution to cut power consumption. "We have discussed how quotas will be allocated, who will be exempt from the programme, what incentives and penalties will be in place, when it will start and what legislative enablers we need to have in place," he said.
Eskom is seeking to cut consumption by 20% and has proposed that rationing be enforced by fines and disconnection.
Alec Erwin, the public enterprises minister, described the situation as grave.
"The unprecedented unplanned power outages must now be treated as a national electricity emergency situation that has to be addressed with urgent, vigorous and coordinated actions," Erwin said. But he denied that the crisis could hit the 2010 World Cup in South Africa.
The government has blamed the power shortages on increased demand caused by years of economic growth and the provision of electricity to black townships that were not connected in the apartheid era. But it has also admitted it failed to heed a warning from Eskom 10 years ago that without new power stations it might not be able to meet demand by 2007.
Price of gold through the roof.