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THERE was more bad news to come from Eskom in terms of the reliability of its electricity supply, said Gold Fields CEO, Nick Holland, who said industry was being "drip-fed news".
"Eskom's problems will not be solved soon; we are being drip-fed bad news and I think there's more coming," said Holland last week following the presentation of the group's full year results presentation.
The performance of Eskom was critical to the continued recovery of Gold Fields' South Deep, a mine west of Johannesburg that generated cash for the first time in years during the group's 2019 financial year following a restructuring costing 1,500 jobs.
Holland said Gold Fields had submitted an application for 40MW of solar power in 2017 and was hopeful of getting the green light to press ahead with the project in the third quarter of the current financial year. It would take 18 months to generate first power from the project, Holland said.
South African president, Cyril Ramaphosa, said in the State of the Nation Address on February 13 that the government would approve the production of power for own use by industry within 120 days from application.
His undertaking is a significant turnaround in Government policy which currently bans independent production for own use above 1MW. Ramaphosa also said that municipalities would be allowed to buy power from suppliers other than Eskom.
"We are looking at our options," Holland said of South Deep's independent power plans. "It could be over the fence (sharing with a neighbour) or on our own. This (40MW) would be phase one. But I'm not optimistic about Eskom," he added. Some 40MW of power was about 20% of South Deep's total power requirements.
"We do have gensets on site and we will increase these and have them synchronised to the grid. We can deal with the more modest loadshedding events especially as we are operating the plant at about a third of its capacity."
"But we need to be able to ensure long term sustainability. I hope to get more information about that at our next results session," he said.
As with other mining companies, Gold Fields had the flexibility of moving certain mining functions, such as hoisting, to the periods of low national consumption, such as weekends, but the company would struggle if load-shedding advanced to the higher stages.
In November last year, Eskom announced stage six loadshedding which rationed some 6,000MW from the national grid. It forced companies such as Harmony Gold and Petra Diamonds to suspend underground mining owing to the safety risks in sending employees underground amid uncertain power supply.