South African Gold Production Declines 10% on Power Shortage

By Carli Lourens

Sept. 4 (Bloomberg) -- South Africa, the world's second- biggest gold producer, mined 10 percent less metal in the second quarter after power was rationed, the Chamber of Mines said.

Output fell to 1.83 million ounces from 2.04 million a year earlier, the Johannesburg-based body said in a statement today. Production was 9 percent higher than in the first quarter, when power cuts halted most mines for about five days.

Rationing power from January enabled state-run utility Eskom Holdings Ltd. to stop rolling blackouts in shops, homes and offices throughout Africa's biggest economy. Falling production is exacerbating rising power, electricity and labor costs for miners, contending with record inflation of 13 percent.

Gold mines are operating at 90 to 95 percent of normal electricity use, the chamber said today.

Other power consumers ``have to do more on an urgent basis to create some space for the sectors that have been curtailed since January,'' the chamber said.

China is the world's biggest gold producer, according to London-based GFMS Ltd.

To contact the reporter on this story: Carli Lourens in Johannesburg at clourens@bloomberg.net