Tanzania Power Utility To Talk With Gold Miners Over Rationing

Tanzania's state power utility, known as Tanesco, said Wednesday it will next week commence talks with gold mining companies over a proposal to ration power.

Talks will explore the likely effects of reducing power supply to the gold mines, a Tanesco official told Dow Jones Newswires by telephone from Dar Es Salaam, Tanzania's commercial capital.

"The decision on whether to reduce power supply on the sector will be reached upon after the talks," the official said.

Last week, Tanzania's parliamentary panel on energy proposed that at least 50 megawatts of power, supplied to gold mines connected to the national grid, be slashed in order to avail power to other sectors that have faced a power crisis since December.

Mines connected to the national grid include Bulyanhulu, Buzwagi and North Mara, all operated by London-listed African Barrick Gold (ABG.LN), a unit of Canada-based Barrick Gold Corp. (ABX). Others include Resolute Mining Ltd.'s (RSG.AU) Golden Pride Mine, Tanzanite One Ltd. (TNZ.LN) and Williamson Diamonds Mine.

Barrick's Tuliwaka Gold Mine and South Africa-based Anglogold Ashanti Ltd.'s (AU) Geita Gold Mine aren't connected to the grid and rely on fuel-fired thermal plants.

Tanesco has been prioritizing power supply to mines because of their strategic importance to the country's economy. Gold is Tanzania leading foreign revenue earner.

Tanzania is facing a 230 MW power deficit, blamed on lowering of water levels at the country's main hydro power stations after a long drought.

According to Emmanuel Jengo, executive secretary of the Tanzania Chamber of Minerals and Energy, slashing 50 MW from the sector could trigger the closure of some mines.

Tanzania is Africa's fourth largest gold producer, after Mali, Ghana and South Africa.

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