The more this power crisis hits home, the harder I find it to see any silver lining to the huge dark cloud that covers South Africa right now. The golden lining, however, you just can’t miss.
I have always resisted pessimism, because I didn’t think that the socialist tendencies of the government were crisis-level serious. I thought they weren’t particularly good at generating growth, or creating jobs, or reducing poverty, but I didn’t think they were going to plunge the country into darkness and economic disaster.
Nevermind the money spent on gas lights, generators, solar panels, batteries, laptop replacements for PCs, fluorescent or LED replacements for light bulbs. Nevermind the money lost to small shops that don’t have generators, or supermarket that are required to turf out frozen foods if their refrigeration is off for more than three hours. Nevermind the the time lost in traffic chaos. Nevermind the hospitals that can’t keep diagnostic machines and surgeries powered. Nevermind the thousands of people with desktop computers that now must switch to laptops (if they can afford to do so) or be rendered useless for a quarter of their office hours.
Every time one sits and thinks about it, new and grave consequences of half a decade or more of regular blackouts come to mind, and all of this is a drain on the economy.
If you think the people who complain are just over-reacting pessimists, consider this:
South Africa’s gold mines, and mining companies in other sectors, were instructed on Thursday night by electricity utility Eskom to shut their mines, possibly for up to between two to six weeks.
A letter signed by Eskom CEO Jacob Maroga said that key industrial consumers (KPI) had to reduce their power loads to “minimum levels”. He added that Eskom could not guarantee power supply.
Same goes for platinum. One mine estimates expected daily losses of R60 million, or almost 10 000 ounces, every single day. Goodbye mining jobs. Goodbye precious metals exports. Goodbye to one of the main stays of the South African economy.
Already, the gold price is spiking. Already, the currency is sliding. Mining stocks are not the place to be right now. The only upside is for the gold bugs. Are they sitting pretty? South Africa recently lost its top position in global gold production to China. Soon, we’ll be fighting it out in the relegation zone.
Goodbye to our prized Global Competitiveness Index rating. Goodbye to boasting about the highest industrial output, producing the most power, and exporting the most minerals in Africa.
And the government’s response?
As you’ve heard from Minister [Alec] Erwin [of Public Enterprises, which is in charge of Eskom, the monopoly power utility], we are facing an emergency situation. However, we are mindful that this electricity emergency cannot be solved by government alone, but will have to be a collective effort by both ourselves and South Africans in general. Let’s all put our shoulders to the wheel to deal with the situation we find our selves in. […]
During our deliberations in Cabinet, it became obvious that the interventions that will provide us with immediate relief will be on the demand side management and energy efficiency. It goes without saying that we therefore, all need to ensure that energy conservation is a way of life.
So what you’re really saying, is that it cannot be solved by government at all. And yet, it is illegal for South Africans in general to do anything other than use less electricity.
Here’s the best bit:
South Africa’s current shortage of electricity, which the government has now conceded is an emergency, will not affect the 2010 Soccer World Cup, according to the government.
And why, pray tell, should we believe that?
Even if it results in an all-new all-singing all-dancing alternative energy industry (which is what the greens are cheering about), our ability to grow the economy, create jobs, and reduce poverty, already marginal thanks to high regulatory burdens and an interventionist government, will soon be a distant memory.
I am not invested in gold. Boy, was I stupid. I’m going to the pub. Even if the beer is warm.
PS: Photographer Philip Mostert wrote to say that Anglogold Ashanti, which offers the imaged used above for download in its media and marketing library, no longer owns the rights to it. Credit for this excellent photograph is, therefore, entirely due to him.
