Planned energy price hikes cannot be sustained by South African pgm mining companies, it was suggested today (2nd February).

State power utility Eskom is intending to increase rates by about 35 per cent annually for the next three years in order to fund a R385 million upgrade to its grid.

However, Anglo American explained that a more sensible approach would be for Eskom to work closely with miners to cut demand and establish alternative power sources.

"A number of the mining groups here today are both major suppliers to and customers of Eskom," said Chief Executive Cynthia Carroll at the Indaba mining conference in Cape Town.

"Clearly none of us is in a position to sustain large electricity price increases year after year."

Ms Carroll admitted that the economic downturn has impacted the pgm sector, but noted that the fundamentals are in place for a strong recovery in the next few years.

"I think we should take comfort from the strength of underlying fundamentals in our key markets such as China, India and Brazil," she added.

Also up for discussion at the conference was the issue of potentially nationalising of South African mining firms, a stance that is being staunchly opposed by Anglo.

Concerns about the government's plans have been raised in recent months by the African National Congress' Youth League, which is in favour of nationalising all mines and banks.

Jacinto Rocha, Deputy Director General of the Department of Mineral Resources, suggested at a seminar in Johannesburg last week that no changes will occur in the next two years.

However, he did not rule out the possibility of raising the issue at the ruling party's next policy conference, which takes place in 2012.

Godfrey Gomwe, the newly-appointed Head of Anglo American South Africa, said that he is happy with the noises emanating from senior government officials on the matter.

"We're confident the South African government believes in a free market economy and it's not about to do anything to impair that and cause damage to businesses and industry," he told MiningMX.

"At this stage, this is a lot of debate and no policy positions have been taken. We will follow this debate but we believe in terms of statements made that in future we will continue to be in a free market domain."

South Africa currently accounts for approximately three-quarters of the world's platinum supplies.

Sources:

S.Africa mines to be hit by Eskom power hikes: Anglo (02/02/10)

Anglo American Sees China Supporting Metals Demand (02/02/10)

Nationalisation of mines not on the cards yet, says Mineral Resources Department deputy DG (29/01/10)

It's time to address the nationalisation of SA mines (01/02/10)

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