will provide support to base and precious metals - especially if...

will provide support to base and precious metals - especially if we see shortage to likewise continue across zambia, congo etc.

Eskom Says 90% Power Limit to Stay in Place to 2012 (Update1)

By Antony Sguazzin

Feb. 13 (Bloomberg) -- Eskom Holdings Ltd., South Africa's state-run utility, will retain limits on power supply to users such as mines and smelters to 90 percent of normal needs until 2012, exacerbating a crisis that threatens economic growth.

The curbs are unlikely to be lifted ``until 2012,'' when the first new coal-fired plant starts up, Eskom Finance Director Bongani Nqwababa said in an interview yesterday. Asked whether supply may be boosted sooner, he said: ``Unfortunately not.''

Platinum rose to a record today in London on concern the restrictions will further disrupt mine output in South Africa, the biggest producer of the metal. Last month, most of the country's mines shut for five days after Johannesburg-based Eskom said it couldn't guarantee supplies. It later agreed to provide industrial users with 90 percent of normal needs.

On Feb. 7, AngloGold Ashanti Ltd., Africa's biggest gold producer, said the restrictions, coupled with the five-day stoppage, will reduce its output by 400,000 ounces this year. Gold Fields Ltd., Africa's second-largest producer, said its production may fall by more than 15 percent.

Roger Baxter, the chief economist of the Chamber of Mines, declined to comment today. The chamber represents most mining companies operating in South Africa.

Platinum Record

Eskom, which supplies 95 percent of South Africa's power, will spend about 300 billion rand ($39 billion) over five years to boost capacity after a wave of power cuts triggered by government delays in approving expansion. Customers including BHP Billiton Ltd., which runs aluminum smelters in South Africa, and Xstrata Plc, which owns ferrochrome plants, have also had power restricted.

South African President Thabo Mbeki, who has described the power outages as a ``national emergency,'' said on Feb. 8 the government will give Eskom funds to help end a crisis that threatens economic growth. The national budget is due Feb. 20.

The power shortages may trim platinum output in South Africa by 500,000 ounces, Barclays Capital said on Feb. 8. South Africa vies with China as the world's biggest gold producer and supplies almost 80 percent of the world's platinum.

Platinum extended its gains, rising as much as 4.7 percent to a record $2,001.25 an ounce in London. On Jan. 24, the day before the five-day stoppage, it traded at $1,610.50.

Gold traded up 0.2 percent at $908.20 an ounce.

To contact the reporter on this story: Antony Sguazzin in Johannesburg at [email protected]
Last Updated: February 13, 2008 12:04 EST