South Africa's Impala Platinum is concerned about lack of clarity over long-term power supply for its new projects and uncertainty over proposed power price increases, its chief executive has said.

State utility Eskom [ESCJ.UL] has been unable to meet power supply to South African mines, forcing them to shut for five days in January. The shutdown could see output fall 200,000 ounces this year. Other hiccups may dent output even further, metal refiner Johnson Matthey said in a report on Monday.

Power supply in South Africa will remain tight with mines receiving around 90-95 percent of their requirements until 2012.

Power supply is not at a desirable level, David Brown, chief executive officer of Impala Platinum, or Implats, told Reuters in a recent interview.

Power is a big concern. How long will the deficit impact on future projects, is it until 2012 or 2013?

Implats, the world's second-biggest platinum producer, supplying about 30 percent of world platinum, has been receiving 90 percent of power since the January mine closures, and this will hurt output for the year to end-June.

Reiterating a forecast on the company's production, Brown said output was expected to come in at just below the 2 million ounces a year mark, compared with 2.026 million ounces in 2007.

But his biggest worry was the firm's future projects.

Implats' Leeuwkop mine, which will produce 160,000 ounces of platinum a year at full tilt, may be delayed by the power woes. Implats plans to boost overall mine output to 2.5 million ounces by 2012, but this timing was now being put in question.

At Leeuwkop, we are still trying to secure power for the mine. We had enough for the initial phase of the project but not for mining. What we need is certainty for planning, he said.

At this rate, investment in future mining in this country is going to start drying up.

Brown said the debate over whether Eskom should be granted a significant price hike had added to uncertainty in the sector.

Eskom, which produces about 95 percent of South Africa's electricity, provoked public anger when it asked for a revised 53 percent tariff increase.


The rigorous debate over the price increases has not yet been clarified and this adds to uncertainty, Brown said.

But Eskom agreed on Friday to phase in the electricity price rises over five years instead of pushing for a sharp hike at a meeting with government, the ruling ANC party and labour unions.

A strong platinum price would offset a decline in output, and Brown was happy that profits would remain buoyant, but said a volatile price may spur substitutes in the long run.

We have a market with strong demand fundamentals versus a shortage of supply. If we have any further supply shocks from South Africa, the price will go up even further, Brown said.

Platinum, used in jewellery and auto catalysts, hovered near $2,157 an ounce on Wednesday, up almost 65 percent in a year.

South Africa produces about two-thirds of the world's platinum.

Brown said Implats had seen no marked impact on its operations in neighbouring Zimbabwe, where a political crisis over a disputed vote has compounded that country's economic meltdown.

Implats has the biggest mining operations among its peers in Zimbabwe, and is expanding its mines in the country with the world's second largest reserves of platinum after South Africa.

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(Reporting by James Macharia; editing by Ben Tan)

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