south african power woes could force anglogold

Wednesday, 21 May 2008

GLOBAL miner AngloGold Ashanti says it may have to buy uranium on the open market as uncertainty over South African electricity supplies could hamper its capacity to meet its sales contracts in-house.

An article in the Mining Journal said the South Africa-based mining house would reschedule some of its yellowcake contracts as the company was concerned unreliable power supply could adversely affect its uranium production levels.

Earlier this year South Africa was plagued by power outages with the electricity cuts impacting on mining activity and prompting some miners to scale back their operations.

“Given the uncertainty relating to availability of power and the impact power constraints may have on uranium production, the company is in negotiations to reschedule some of its uranium contracts,” AngloGold said in the Mining Journal report.

Depending on how the negotiations went, the miner said it may look to shop for uranium on the open market to fulfil its contractual obligations.

Eskom, South Africa’s state-owned power supplier, has rationed electricity to industrial customers since the power woes hit. The utility said power shortages could remain in place for the next four years.

Spot uranium was trading at $US60 per pound.