Load-shedding hits miners

Mining companies are sweating over the potential of not meeting their production targets in view of the on-going load-shedding exercise.

The issue is not just about producing below targets, but also the resultant retrenchment of some of their workers because they have to keep tabs on the cost of operations. The companies say having to rely on generators to keep their mines running 24-hours is much more costly than using power from the national grid.

The load-shedding has occurred as a result of the inability of the Sunon Asogli Power Plant to produce power after pipelines belonging to the West Africa Gas Pipeline Company (WAPCo), which carry gas to the plant, were damaged by a ship in Togo.

Mining executives told the B&FT it is only logical that the companies take a second look at their operations, in terms of their manpower deployment, if the load-shedding persists longer than expected.

Kwame Addo-Kuffour, Anglogold Ashanti’s (Ghana) Vice President in charge of Corporate Affairs, said the mining industry will suffer most in terms of keeping up with the pace of running costs.

He expressed sentiments indicating that the industry will have to rationalise its operations to make production profitable.

Currently, mines that have been severely affected by the load-shedding are Goldfields Ghana Limited’s Damang and Tarkwa Mines; Ghana Manganese Company’s Chirano Mines; and Adamus among others who rely on the Electricity Company of Ghana for power supply.

President of the Ghana Chamber of Mines, Mr. Dan Owiredu, in an interview said so far the challenge has been with the ECG customers.

“The ECG customers are potentially exposed, so there have been some formal communications between ECG and the mining companies in which we have said that given the difficulties in the management of the load-shedding, sometimes we are not too sure of what the load will be like at the bulk supply point during the peak period.

“This means that those on the ECG [system] will have to put on their generator sets within that period to sustain production,” he said.

“The fact is that ECG customers are now incurring higher costs of energy bills and cannot sustain the same number of employees if the load-shedding becomes acute.

“This can be managed in the short-term, but if it goes on beyond a certain point we will have no option than to cut down on our numbers and our production,” he added.

Mr. Owiredu revealed that there are on-going negotiations between a consortium of four mining companies -- AngloGold Ashanti, Newmont Gold Ghana, Golden Star Resources, and Gold Fields Ghana Limited --- to run approximately 35 megawatts of power from the 80-megawatt power plant the four donated to government through the Volta River Authority.

The four companies had provided the plant to VRA to maintain as back-up capacity in the event of a crisis like the industry has now been plunged into.

“For us, we opted for that because the cost to our business of not running is higher. If we shut down the cost will be too high, because you’ve got the fixed costs and you will be producing nothing if every time your plant is down,” he said.

Mr. Sulemanu Koney, Director of Analysis, Research and Finance of the Chamber, confirmed that the challenge has been with ECG’s customers in the industry.“It is in the interest of government to stabilise the situation,” he said.

Meanwhile, the ECG has said the ongoing load-shedding exercise is likely to continue into next year if repair works on the West African Gas Pipeline are not completed by December 25, as WAPCo has indicated.

According to the company, it can only supply power to its customers if it continues to receive power from its generators.

“For us, since we are not a generator, whatever we get from the generators we sell. If by December they can give us the extra energy, then we will take that and sell to our customers. This means the load-shedding will stop. If it continues beyond that, we will have to do the load- shedding until we can get the full complement of energy,” a source at ECG explained.