Miners To Lead South Africa's Independent Power Growth - Law Firm

Miners in South Africa will lead the way in developing independent power production to guarantee security of supply, law firm Werksmans Attorneys said Wednesday.

Eskom Holdings Ltd., the producer of most of South Africa's electricity, has said energy supplies will be tight in the next two years. In addition to supply concerns, electricity prices are set to rise by 25% a year over the next three years at Eskom.

Already the producer of 95% of South Africa's electricity, Eskom experienced shortages due to a series of problems including mismanagement of coal supplies in 2008, when power blackouts cut supplies to industry and homes.

"Mines were severely affected by the 2008 crisis, when their dependence on one supplier was starkly highlighted," said Werksmans director Dave Walker, who specializes in corporate mining and energy law.

"There is no immediate crisis now but the mines are well aware that, because of their heavy consumption, Eskom will look at them first for electricity savings in the event of a supply crunch," he said.

Miner Xstrata PLC (XTA.LN) is completing a feasibility study for the first phase of a 600-megawatt thermal power generation plant that will supplement future electricity supply for its operations in the country.

Anglo American PLC (AAL.LN) is also looking at options for a 450 MW power plant that would be operated by an independent power producer and use coal from Anglo's operations. The miner said it would buy power from the operation.

-By Devon Maylie, Dow Jones Newswires; [phone]; [e-mail]