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Additional power provides beacon of light for gold producer
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4th April 2008
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The announcement of an additional 260-MW allocation of power to the mining sector by the Department of Minerals and Energy (DME) has been welcomed by multinational gold producer Gold Fields, which has four deep-level mining operations in South Africa, namely Kloof, Driefontein, Beatrix and South Deep.

An additional 26 MW of electricity supply to Gold Fields has been granted by State-owned electricity utility Eskom for use at the company’s Driefontein and Kloof gold mines in mid-March.

This increased the total power available to Gold Fields to 566 MW and allowed the company to work at 95% of its normal average consumption.

Gold Fields head of South African operations Terence Goodlace expressed the company’s approval of the increase in power supply, saying that Gold Fields will now be in the position to re-evaluate its retrenchment plans, as well as the safety concerns that stemmed from the unplanned and intermittent power cuts.

“We welcome the latest developments. The additional power supply to our mines will help to limit job losses, and will have a positive impact not only on our company and its employees, but also on the broader economy. We will work closely with Eskom and our peers in the industry to use this additional allocation of electricity to the greatest benefit of all stakeholders, and to ensure that safety is prioritised,” says Goodlace.

The additional power allocation from Eskom was facilitated by the DME, following mining sector representations by the Chamber of Mines (CoM), and consultation with stakeholders in the mining industry.

The CoM reports that the increase in electricity supply will be neither immediate nor comprehensive, but will be introduced in a phased manner with the deep-level mines receiving priority owing to their more urgent energy needs.

However, Goodlace says, “Gold Fields will continue to save power wherever possible as we appreciate that, like everyone in the country, we have a duty to play our part in energy saving.”

SECURING JOBS
“The granting of additional power to our mines will go a long way to help saving jobs at Driefontein and Kloof gold mines,” says Goodlace.

Gold Fields media relations officer Andrew Davidson says that Gold Fields has, however, given an undertaking to unions and associations that the company will not send out any retrenchment notices until consultations have been completed with the unions and mineworkers.

“The additional power allocation will alleviate the possible job losses that have been proposed. Any increase in power is significant and the 260-MW increase will definitely improve operations,” says Davidson.

PRODUCTION LOSSES

The 10% reduction in electricity supply to local mining companies has resulted in significant losses and in its financial results presentation earlier this quarter, Gold Fields provided gloomy forecasts for its gold production output for the year ahead.

“We said, at our financial results presentation, that the reduction in electricity supply would impact on production and we might have to look at closing down and scaling back shafts. “The forecasts are that we would lose 25% of our normal production in the current quarter, and in the subsequent quarter, this figure could be between 15% and 20%,” says Davidson.

Goodlace says that the additional power allocated to the company will not prevent the forecast production losses of more than 20% in the current quarter.

DRIEFONTEIN DEPTH EXTENSION
Goodlace says that the company will look at increasing production near to levels prior to those before the reduction in power supply, as soon as the specific additional allocation for each of its mines is confirmed.

This may include the restarting of the Gold Fields’ depth- extension project at its No 9 shaft in Driefontein that bore the brunt of the electricity supply shortage to its mining operations in the current quarter.

“After the decision by Eskom to supply us with 90% power, we decided that we would not have enough power to continue this project,” explains Davidson. He adds that the life of the Drie-fontein mine continues to be about 20 years, but that the funds that were allocated for the depth-extension project will assist in restructuring its South Deep gold mine.

Davidson says that No 9 shaft was contracted to various contractors at Murray & Roberts, but the contract has been suspended and the contractors are no longer working on the extension project at Driefontein.

The company’s other mining operations, namely South Deep gold mine and, to a lesser extent, its Beatrix gold mine, were similarly affected by the 10% reduction in power supply.

Gold Fields reports that these mines will not share in the additional 26 MW of power, but the company believes that these mines can operate at the current levels of electricity supply, owing to the shallower depth at which Beatrix operates and the nature of the restructuring operations under way at South Deep.

Edited by: Esmarie Swanepoel

 

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LIGHT AT THE END OF THE TUNNEL
Gold Fields is buoyant at Eskom's announcement of an additional 260-MW power supply to the mining industry
 
Picture by: Goldfields
LIGHT AT THE END OF THE TUNNEL Gold Fields is buoyant at Eskom's announcement of an additional 260-MW power supply to the mining industry
 
PRODUCTION SPIKE
Gold Fields has had to scale back its mining operations at its Driefontein and Kloof gold mines
 

PRODUCTION SPIKE Gold Fields has had to scale back its mining operations at its Driefontein and Kloof gold mines
 
 
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