Electricity Rationing Negatively Impacts AngloGold Ashanti Operations in South Africa

Power crisis to dent results of AngloGold Ashanti

Johannesburg - Safety shutdowns and operational woes hit AngloGold Ashanti's fourth-quarter results, hurting its shares yesterday as the gold producer said a power crisis would dent future production.
AngloGold said it expected to produce between 4.8 million and 5 million ounces of gold this year compared with 5.48 million ounces in the past year - a decline of 3 percent.

That outlook follows a power shortage in South Africa which would mean 90 percent power supply for the remainder of the year and cut production by some 400 000 ounces of gold this year, said AngloGold.

A mining analyst at Sanlam Investment Management, Stephen Roelofse, said: "The outlook looks quite dim.
"I hope the company is underpromising and that in reality things won't be that bad."

The power shortages forced gold and platinum producers in South Africa - a leading producer of both metals - to shut down for five days, pushing global prices of the commodities to record highs on supply concerns.

Eskom has said it would only supply up to 90 percent of the power required by big mining firms.

AngloGold chief executive Mark Cutifani, who has made safety a key focus since taking up the post last year, said improvements in its performance depended largely on whether South Africa could solve the power crisis.

"The uncertainty around Eskom power supply is having a significant impact on our operations in South Africa. We have a great deal of work to do on our operational and cost performance," said Cutifani.

During the December quarter, Anglogold cut its hedge book - one of the biggest among its peers - from 10.58 million to 10.39 million ounces of gold.

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