South Africa shuts down all gold and platinum mines
The power crisis in South Africa which has been leading to electricity outages across the country, has led to the country’s gold and platinum mining majors to shut down their operations until continuity of supplies can be guaranteed.
Author: Lawrence Williams
Posted: Friday , 25 Jan 2008
LONDON -
The power crisis across Southern Africa, and in South Africa itself in particular, has led to the temporary shutdown of all the latter country's major gold operations. Power failures at major mining operations, particularly given the depths of the operations, would be dangerous in that hoisting capacity to bring the miners out of the workings, which would be necessary because of possible ventilation breakdowns, would be severely limited.
South African state electricity provider Escom has reportedly told the mines it cannot guarantee the continuity of electricity supplies and, as a result Anglogold Ashanti, Gold Fields and Harmony have had to take the decision to shut down their operations until power supplies can be guaranteed.
While South Africa is still the world's largest gold producer, although it is being overtaken by China, any continued disruption of operations would have a significant impact on world gold supplies.
South African gold mine stocks fell on the news, and the disruption to supplies was also a factor in the gold price rising to new highs this morning where it reached just on $920 at the time of writing.
The power crisis will also have a similar impact on other sectors of the mining industry and platinum supplies will be particularly vulnerable with the country being by far the world's largest producer of platinum group metals. The world's two largest producers., Anglo Platinum and Impala, have also had to shut down their operations and smaller operators will be following suit. World platinum prices have also reached new records as a result.
The crisis is a major blow to the South African economy as well as to the country's miners.
At the moment there is no indication as to how long the closures will continue, but comments from South Africa suggest that the situation may get worse before it gets better. Watch this space!
