CALEDONIA Mining has resorted to using generators owing to persistent power cuts, a move that could further raise gold production costs. The company says it has acquired a generator for its Blanket Mine near Bulawayo and expects to start using it early next month.
Caledonia said the cost of the standby generator will be met through an increase in Blanket Mine’s existing US$1,25 million debt facility awaiting finalisation.
“Blanket Gold Mine currently relies exclusively on a Zimbabwe Electricity Supply Authority (Zesa) 33kV electricity supply to run all of its operations,” said Caledonia in a statement.
“In recent weeks, the continuity of electricity supplies has deteriorated significantly: average daily power outages at Blanket have increased from approximately five hours per day in February 2010 to over nine hours per day in May.”
Zesa pledged that it would ensure uninterrupted supply of electricity to mines but incessant breakdowns at Hwange Power Station have worsened supplies to the industry.
Most mines started operations almost a year ago after a lengthy period of closure while others were under care and maintenance as the cost of production spiraled in the hyper-inflation years which were characterised by a skewed exchange control regime that forced mines to accept a high percentage of exports in local currencies.
High operating costs, failure to attract lines of credit and power shortages worsened the situation.
A reliance on diesel generators, which cost slightly more than electricity provided by Zesa, will result in higher production costs.
“The increased frequency, coupled with the unpredictability and duration of power outages has an adverse effect on gold production, and on the underground installations essential for the completion of the shaft expansion project,” said the gold miner.
“In light of the rapid deterioration in electricity supply, Caledonia has decided to accelerate Blanket’s programme to install sufficient diesel generating capacity and allow mining operations to continue at the current rate of production during electricity outages.”
“These additional generators will give Blanket sufficient standby generating capacity to maintain its target production of 40 000 ounces of gold per annum even if the current level of electricity outages continues,” said Caledonia.
Zimbabwe has been hit by an acute shortage of power because of incessant breakdowns at Hwange Power Station.
Electricity supply is among the major hindrances to a rebound of gold production which used to be the highest foreign currency earner in 1999, when it was at its peak with more than 24 tonnes produced.
This year, gold miners expect to produce around seven tonnes of the
metal up from 4,2 tonnes produced last year.