South African Q1 Gold Production Falls 16.8% on Energy Crisis

South Africa’s gold production in the first three months of 2008 fell by 15.6 percent to 52.228 kilograms, compared to the last quarter of 2007, according to a statement issued by the South African Chamber of Mines. Year-over-year, gold production declined 16.8 percent. 

The Chamber noted that the “national electricity emergency that effectively closed the gold mining industry from January 25 to 31” was the key reason for the dramatic drop in production.

“From the beginning of February the gold mines faced a curtailment of electricity supply to 90 percent and this turned out to be exceptionally challenging for the industry. Given the strong relationship between electricity usage and mining production, the Chamber had warned that a 15 to 20 percent decline in production was probable given the curtailment in electricity supply,” the statement said.  

During the month of March, the Chamber says that it became clear that some mines were experiencing difficulties in operating at 90 percent of their normal electricity supply and that, if this situation continued, it could force them to shut down parts of their operations, resulting in job losses.

In response to this, Eskom was pressured and increased the electricity supply to these mines beginning March 14, but many are still not operating with full power.

South Africa’s gold mining production accounted for R40 billion ($5.15 billion), 7.5 percent of the country’s “merchandise exports” and employed 168,860 employees, 34 percent of total mining employment in 2007.