XSTRATA has declared force majeure on ferrochrome and vanadium supplies out of South Africa due to a power crisis in the country.

Reduced power supplies from Eskom have affected the mining industry and many firms have closed their mines or reduced operations to guarantee worker safety.

The news is a blow to the industry and signals the danger that it is currently in, production and job cuts have been threatened at a time when platinum prices are at record highs.

A force majeure is declared when a firm cannot deliver into contracts because of an event beyond its control excusing it from liability.

Meanwhile mines are beginning to restart their operations after Eskom allowed them to make limited increases on their energy consumption.

According to Reuters, Eskom can now offer only 80 per cent of the power needed by the mines, ten per cent short of the 90 expected by platinum mines.

Shortages are expected to last for several years and rolling blackouts are expected to continue for the next month.

Eskom is also expected to pull the plug on its 100MW solar energy project to be built on the Northern Cape.

Louis van Heerden, Renewable Energy Corporate Specialist at Eskom, said a decision on whether to continue the project would be made by "March of April".

He said that "Eskom's greater electricity-supply plans" were being considered in the decision making process.

Eskom currently has a five-year R300 billion capital expenditure plan to deal with the current electricity supply shortfall and the firm has said that the supply of coal was a challenge for the future.

According to miningweekly, Rob Lines, General Manager for Primary Energy Generation, told a conference that demand was greater than production and it was becoming a concern.

He said it was essential that more coal was mined in order to prevent a sustained energy crisis but admitted that the slow processing of mining rights was holding this back.

A feasibility study has looked into aspects of the solar panel project and the results are now being evaluated.

Sources:

Xstrata's declaration is deeply worrying, 01/02/08
http://www.miningmx.com/commentary/850840.htm

Eskom may soon pull trigger on 100-MW solar-energy project, 01/02/08
http://www.engineeringnews.co.za/article.php?a_id=125964

Eskom asks DME to speed up mining rights process to ease coal supply gap, 01/02/08
http://www.miningweekly.co.za/article.php?a_id=125940

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