Will the gold market follow platinum’s recent price increases?
*Financial Times, by William MacNamara, February 26, 2008
“A reduced power supply to South African mines could lead to sharp production losses and thousands of job cuts at Gold Fields, Africa’s second largest gold producer, the company said on Monday.
Gold production was likely to fall between 15 per cent and 20 per cent a year at Gold Fields’ South African mines as long as they were operating on 90 per cent of their normal power supply, the company confirmed, noting that power rationing was expected to last five more years. An estimated 6,900 employees, or 13 per cent of the workforce, could lose their jobs in restructuring, and some shafts could be closed down.
The company’s statements were the fullest and most drastic signs yet of the industrial costs of South Africa’s electricity shortage.
Since late January, the country’s mines – among the world’s biggest producers of platinum, gold, and diamonds – have operated at 10 per cent less power to mitigate a national power crisis.
The inability of Eskom, the power utility, to supply mines their normal power allotment “has caused a significant crisis in the South African mining industry”, said Terence Goodlace, Gold Fields’ head of South African operations.”
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