Volta Power Cuts to Hit Gold Mines

Low water levels in the Volta River system have led the Ghanaian power generation agency, the Volta River Authority, to begin a program of load management that includes some power cuts to users, including the country’s large gold mines.

Gold Fields (GFI-N, GOF-L), AngloGold Ashanti (AU-N, AGD-L) and Golden Star Resources (GSC-T, GSS-X) were all warned by the Authority to expect power shortages. Large users are being encouraged to cut their own power consumption by a quarter to a half.

Golden Star said its Bogoso-Prestea and Wassa gold mines could make up a power shortfall of that amount by generating power on-site using existing diesel generators, at a cost of US$700,000 to US$1.4 million per month. The Wassa plant has cut throughput to 8,000 tonnes per day from 11,000 and exploration drilling has been cut back at Prestea.

Gold Fields estimated that diesel generation at its Damang and Tarkwa mines would run up a price tag of US$4 million in a month. Gold Fields operates the two mines and has a 71.1% interest; Toronto-listed Iamgold (IMG-T, IAG-N) has 18.9% and the government holds a 10% carried interest.

AngloGold, which operates three mines in Ghana, said that it was generating power from diesel units at Obuasi and had reduced its demand from the grid by about 25%. Diesel generation will cost about US$1.8 million per month. At Bibiani, it was rationing power but maintaining near-normal levels of production.

The third Anglo mine, Iduapriem, has mills that use about 60% of the power consumed by the whole operation, and any cut of 25% would result in production falling by about 30%. If the power cut were any deeper, the mills would likely have to shut down. Anglo estimated that third-quarter production would fall to about 48,000 oz. from a budgeted 52,000 oz. if the mill had to cut back 30%.

The mining companies met with the Authority under the auspices of the Ghanaian Chamber of Mines and offered assistance with new power projects.

Water levels at the Authority’s giant power dam at Akosombo on the Volta River have been at record low levels. The dam, which produces about 70% of Ghana’s domestic electrical power, was designed for water levels of 73 to 85 metres, but the water went as low as 72.2 metres and the current level is 72.9 metres.

Low rainfall last year, and increased use upstream in Burkina Faso, have both been blamed for the low water levels. A rainy season that normally arrives in September is expected to bring some relief.

A thermal power plant in western Ghana had been operating below capacity because it is being converted to burn natural gas instead of oil, further depriving the grid of power, although the Authority said that the plant was currently at full capacity. That plant is expected to be fully converted late in the year. Ghana also buys power from neighbouring Cote d’Ivoire.