Vol. 72/No. 8      February 25, 2008

Power shortages in China, South Africa, and Argentina in January highlight the lack of energy sources and electrical capacity in nations saddled with legacies of imperialist domination. The lack of sufficient electricity is blocking these countries’ ability to advance industrial development and meet the needs of millions.

In a February 8 televised State of the Nation address to parliament, South African president Thabo Mbeki said the situation “has precipitated the inevitable realization that the era of very cheap and abundant electricity has come to an end.”

Since 1994, when the African National Congress came to power, South Africa has doubled the percentage of its population connected to the electrical grid. It now stands at more than 70 percent. But the country faces a challenge in building new power plants and bringing them on line fast enough to meet growing electrical needs.

Plants commissioned in 2003 and 2004 have yet to be built. An effort by the government to privatize the state-run Eskom power utility failed, as did its attempt to induce private investors to build additional power plants.

The electrical shortages affect key sectors of South Africa’s economy. Nico Vermeulen, executive director of the National Automobile Association of SA, said car production in the country is vulnerable to the shortages. The head of the Retail Motor Industry Organisation said 13 car dealers have closed in the last three months due to the electricity crisis.

South African gold and platinum production is also expected to fall. As a result, the price of gold rose just over $900 an ounce and platinum went up to $1,819 an ounce in February. AngloGold Ashanti announced it expects a reduction in gold production by 400,000 ounces in 2008—and that is only if Eskom meets a sustainable power supply of 90 percent for the rest of the year.

Platinum is used in catalytic converters that are required by environmental laws in cars, trucks, and diesel engines to be sold in North America, Europe, Japan, and many other countries. South African mines supply nearly 80 percent of the world’s platinum.

The electrical shortages have also impacted South African financial markets. JPMorgan Chase & Co. encouraged investors to cut their holdings in South African equities, reported Bloomberg February 7. The financial news agency said that foreign investor demand for South African stocks and bonds has fallen by $2.6 billion.

“Investors are selling everything South African because of the worsening growth outlook, the current-account deficit and power shortages,” said Victor Mphaphuli, a portfolio manager at Stanlib Asset Management in Johannesburg.  
 
Power shortages in China
Severe snow storms in January blocked the delivery of coal to power plants in China and left the country’s coal-fired plants with as little as three days’ worth of coal. Coal-fired power plants account for 80 percent of China’s electricity.

President Hu Jintao met with coal miners inside one of the country’s largest state-owned coal mines. He exhorted miners in state-owned mines to produce more coal and produce it faster.

Vacations for miners in Datong, one of China’s largest coal regions, have been canceled. Miners at state-owned mines are working overtime. The regular quota at one of Datong Coal Group’s mines is 150,000 tons of coal per month. Government officials have asked workers to quadruple that figure to 600,000 tons for February, reported the New York Times.

Last year, the number of mining deaths in China was 3,786, the highest for any country in the world. But that was a fifth less than the previous year. The government closed thousands of small mines in 2006 in an effort to reduce fatalities and consolidate the industry into larger, more efficient operations.

Operators of several small mines that were closed due to safety problems have been trying to recruit workers and reopen. Government officials in Beijing insisted that the drive to produce more coal would not lead to a retreat in mine safety priorities, according to the Times.  
 
 
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