South Africa's Northam Platinum Ltd. is still managing with only 95 percent of normal power supply and the shortage may continue for another four to five years, a senior company official said.

We have experienced some power outages at our existing mines that has led to around five days of lost production, but that occurred in the latter part of 2007 and the first month of 2008, Damian Smith, chief geologist, told Reuters.

We are producing at 95 percent of our power requirement and probably only coming back to 100 percent in 2012 or 2013. But we can cope with 95 percent, he said in an interview.

The electricity grid supplying power in South Africa, which accounts for 80 percent of global platinum output, came close to collapse in January, forcing mines to shut down for five days. Since then mines have been operating below full power.

Analysts said the electricity crisis followed years of underspending by state electricity firm Eskom.

Smith said the company had been proactive over the past four to five years and had upgraded the plant and worked on power efficiencies. The impact of the recent power crisis in south Africa had been limited to the company's operations.

The main problem in the mining industry was managing peaks and troughs of power supply, he said, adding that the main issue was when to draw electricity rather than how much power to use.

Over the last four or five years, we have upgraded our water pumping and refrigeration facilities in such a way that we can switch off those facilities (when necessary), he said.

We have been forced to be innovative over the years because we have the deepest platinum mine in the world, he added.


Smith said the company was concentrating on the acquisition of the huge Booysendal platinum project, which would help it in more than doubling production of platinum, palladium, rhodium and gold to a combined total of 700,000 ounces a year by 2015.

We are close to the completion of the acquisition. We only need the shareholders' approval and we expect that to be approved in the first week of June, he said.

The acquisition of Booysendal will grow our resource base six fold and that will give us operations, which we can run for more than 50 years, Smith said.

Smith said that mining costs in South Africa were rising.

Some of that is due to the weakening of the rand. A lot of prices, for example steel and oil, have been fixed in the dollar and that's resulting in a double digit inflation year on year.

But Northam isn't unique in that. All producers in South Africa are suffering from those pressures.

Smith remained bullish on platinum prices, which hit a record high of $2,290 an ounce in March and was quoted at around $2,176 an ounce on Thursday.

Johnson Matthey, the world's top platinum distributor, said on Monday platinum prices may spike to a record high of $2,500 an ounce this year and the market was expected to close 2008 in a deficit due to production shortfalls and strong demand.

He said that market fundamentals were strong and platinum supply had been lower than growing demand mainly because of lower than normal production by top platinum miners.

Maybe not above $2,000 in the long run, but I think platinum prices are going to remain strong, Smith said. (Reporting by Atul Prakash; editing by Editing by Peter Blackburn)

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