Tanzanian Gold Mines' Power Usage To Soar - Mine Body

Gold mining companies operating in Tanzania are expected to nearly treble their power consumption in the next couple of years as more mines get connected to the national power grid, Tanzania's Chamber of Minerals and Energy said Wednesday.

According to Ami Mpungwe, the TCME president, power consumption in the mining sector is expected to increase to 146 megawatts from the current 50 MW, when all the mines are connected to the national grid.

"There is a need to improve infrastructure to sustain growth in this (mining) sector," he said by telephone from Tanzania. "Currently, most mine houses are generating their own power at a substantial cost, which erodes competitiveness."

According to Mpungwe, because of the substantial costs involved in running operations in the energy crisis-stricken nation, Tanzania is unable to benefit from the current boom in international gold prices.

The state power utility, Tanzania Electricity Supply Corp., is the process of extending transmission lines to mines in remote areas around Lake Victoria in an effort to connect them to the national grid.

Some gold mines, including Geita Gold Mine, the country's largest gold miner by output, aren't connected to the national grid and rely on fuel-fired thermal power plants to run operations. Geita is owned by South Africa-based Anglo Gold Ashanti Ltd. (AU).

Mines connected to the national grid include the Bulyanhulu, Buzwagi and North Mara mines--operated respectively by African Barrick Gold (ABG.LN), Resolute Mining Ltd.'s (RSG.AU) Golden Pride Mine, Tanzanite One Ltd.--and the Williamson Diamond Mine.

Mines connected to the national grid also have backup thermal generation plants, due to the poor power supply in the East African nation, which is facing a deficit of at least 300 MW due to inadequate generation at its main power plants.

The Tanzanian government said in August that it is planning to increase power tariffs for the electricity supplied to gold mining companies in a bid to fund its ailing electricity sector.

According to the energy and minerals minister, William Ngeleja, the government is also planning to spend $775 million on emergency power projects aimed at doubling generating to 882 MW by December 2012.

Gold is Tanzania's main foreign revenue earner.

-By Nicholas Bariyo, Dow Jones Newswires; 256-75-2624615 [e-mail]