Just read a Reuters report on Zimbabwe, reporting that Zimbabwe's Energy Minister, Fortune Chasi told his Parliament, "the country's anchor power producer, Kariba Dam, could be forced to stop production within 14 weeks as a result of receding water levels." This is an important issue given the power outages in the country.
How does this relate to South Africa? Turns out, according to Reuters, that Zimbabwe has not been able to pay for its power imports from ESKOM, since last October, leading to ESKOM'S curtailment of exports from 450MW to 50MW.
The demands on ESKOM have the makings of crisis, even human tragedy, if the needs for power not only within South Africa, but its neighbor are not resolved. Its understandable why Phakamani Hadebe, ESKOM'S respected CEO, who has served only for one year, recently announced his resignation due, he said, to the "unimaginable demands which have unfortunately had a negative impact on my health."
All of this highlights the fragile situation within South Africa and the region, that could easily impact the platinum and gold mining industry. Somehow, I do expect the mines to be able to manage the ESKOM challenge though with higher mining costs. Perhaps the only possible savior could be a weaker rand, since the mines output is priced in dollars, and a weaker rand means more rand when revenue from dollars are converted, for higher expenses. But of course, the rand is also a risk since a higher rand, that could for example result from higher precious metals prices, would lead to narrower margins, and everything else being equal, lower production.
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