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Energy woes haunt second producer of gold in South Africa

AngloGold Ashanti yesterday became the second South African gold producer to warn of a sizeable fall in output this year if forced to slash its electricity consumption to help ease an energy crunch.

AngloGold said it expected to produce between 4.8 million and 5 million ounces of gold in 2008, down over 400,000 ounces or more than 7 percent on last year's figure, if state electricity supplier Eskom maintains its order to cut electricity consumption by 10 percent.

"The uncertainty around Eskom power supply is having a significant impact on our operations in South Africa," said AngloGold Ashanti CEO Mark Cutifani, adding that the company was working with trade unions, Eskom and the government to find "sustainable solutions" to the problem.

The company is the second gold producer to warn of a significant fall in output after Eskom put heavy industry on a leaner power regimen in a bid to end more than three weeks of rolling blackouts caused by electricity shortages. Residential users are also being asked, but not yet forced, to cut power use by 10 percent.

Gold Fields, the world's fourth-largest gold producer, last week warned that a 10 percent cut in power could result in a cut in production of up to 20 percent.

South Africa's large gold, platinum and diamond mines have been ramping up production over the past week after being ground to a halt for five days last month when Eskom said it could not guarantee an uninterrupted power supply.

AngloGold issued its prediction of reduced output when announcing its fourth-quarter and 2007 final year results.

Production fell 3 percent to 5.48 million ounces following safety interventions in South Africa and operational difficulties at a gold mine in Tanzania, the company said.
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