Two of the world’s largest gold producers, Gold Fields and Harmony have already indicated that they might slash jobs. More than 16,000 jobs will be lost.

Gold Fields spokesman, Andrew Davidson, says most of the jobs that are on the line are for contract workers.

The world’s fourth largest gold producer employs over 40,000 workers. South African mines employ over one hundred thousand 100,000 rural migrant workers from the Southern African Development Community, Botswana, Lesotho, Mozambigue and Swaziland.

However, by the time of going to press, another world class producer, Anglo Gold Ashanti, said discussions were ongoing with the miners unions.

The company’s spokesman, Alan Fine, says “Our situation is that we have not, at this stage, made any plans to lay off workers due to the power crisis. Our approach is that we are looking at a range of possibilities both to enhance the supply of power and to introduce new energy efficiencies in an effort to avoid or minimize production and job losses”.

Fine added retrenchments would only be the last resort. Eskom’s power rationing forced the country’s largest mining houses to suspend their labor- intensive operations for a week last month. The power utility wants mines to cut their power consumption by ten percent.

“We have lost 7,000 ounces of gold due to power interruptions”, another Gold Fields spokesman Riedwaan Woodkay says.

South Africa‘s gold sector lost 7.3% of its market value, its biggest one day percentage drop since August and gold rose to a record high of $922 an ounce after the news of suspension of operations by the mines. Mining constitutes seven percent of South Africa’s gross domestic product.

The power crisis is attributed to a growing economy of Africa’s powerhouse. South Africa’s economy grew by 5.4% in 2006. “The power outage is likely to impact on our fixed investment effort, which is sort of the centerpiece of our growth program going forward” says Johan Botha, senior economist at Standard Bank.

Critics have lambasted the government for failing to heed warnings, some dating back more than a decade, that power capacity would not be sufficient to meet rising demand in its growing economy.

Eskom plans to spend R300 billion ($40 billion) on new power generation in the next five years. The country’s finance minister, Trevor Manuel this week allocated R60 billion ($6billion) to Eskom to mitigate the electricity crisis.

Eskom chief executive officer, Jacob Maroga blamed high demand for coal as one of the biggest problems facing the power utility.

“There has been a surge of demand for coal, and as a result, some companies who used to be the reliable suppliers of coal to Eskom are beginning to see greener pastures elsewhere to the detriment of the South African Society,” says Maroga. (allafrica)