4 September 2006

Ghana: Power Crisis Worries Gold Miners

Johannesburg — LAST week's warnings from gold miners operating in Ghana that their operations could be hit by power disruptions highlighted increasing power shortages across Africa, as growing economies grapple with inadequate planning and higher energy costs.

In SA, government and power utility Eskom have faced mounting public criticism over failure to plan several years ago for the demands of an economy which grew at 4,9% in the June quarter. SA's mining sector has assisted Eskom during the past winter with energy-saving measures to ensure continuous power supply to urban areas.

Ghana's state power utility, Volta River Authority, relies on power generated at the Volta hydroelectric power station, Aboadze thermal power station and imports from Côte d'Ivoire.

The immediate crisis is being attributed to seasonal effects on hydroelectric power. Water levels in the Volta catchment area are generally at their lowest at this time of year but are replenished this month and next. This year, rains are late.

The problem is exacerbated by retrofitting to Aboadze to enable it to operate on gas when the west African gas pipeline comes online late this year. That means it is now operating at less than full capacity.

Gold Fields said it was assisting the Volta River Authority in expediting the rewinding and return from the UK of a generator rotor for Aboadze. A mining source said the mines were giving assistance in helping Ghana meet its power needs.

Ghana's major industrial users of power are the Volta Aluminium Company (Valco), which is owned jointly by the Ghanaian government and Alcoa, and the gold miners, including AngloGold Ashanti, Gold Fields, Newmont and Golden Star. Aluminium smelters are huge electricity users, dwarfing the mines, but only some of the Valco smelters are in operation.

AngloGold is a bigger user of electricity in Ghana than Gold Fields, partly because AngloGold operates Ghana's only underground mine at Obuasi, which depends on electricity to power ventilation and pumps. But Ghana is a bigger contributor to Gold Fields' overall operations than it is for AngloGold.

AngloGold, Gold Fields and Golden Star said they, together with other bulk users, had been instructed by the Volta River Authority to reduce power usage 25%-50%.

Through the Chamber of Mines, they have been in discussion with the authority to identify ways in which to minimise usage from the electricity grid and help mitigate power disruptions.

They can use diesel-powered generators, but the costs, says Golden Star, are about five times the cost of grid power.

AngloGold operates the Obuasi, Iduapriem and Bibiani mines in Ghana, while Gold Fields operates Tarkwa and Damang. Golden Star's mines are the open-pit Bogoso-Prestea and Wassa mines. Newmont, which has not yet put out a statement, is in the early stages of constructing the Ahafo and Akyem mines.

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