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Production drops as power cuts increase

The Steel and Engineering Industries Federation of South Africa (SEIFSA) has come out to express their concerns around the continued power disruptions expected in 2015.

Henk Langhoven reported a 2.5 per cent decline in production in the first 11 months of 2014. Adding to this, Langhoven stated that a previous estimate of the impact that electricity cuts could have showed that, if this trend continued, it could have the ‘potential to wipe out 23 percent of production in the steel and engineering sector.’

The warnings from Eskom have been taken very seriously. ‘We are a large proportion of the energy users’, said Langhoven.

‘I mean without that we can’t produce. If you look at electricity as a percentage of the cost of inputs it isn’t that high. But if you compare that with the fact that if you don’t have energy you can’t produce and secondly, with profit margins, it becomes quite serious.’

Langhoven reported that the production of rubber went down by 5.9%, plastics (2%), Basic iron and steel (0.9%), structural steel (6.3%), with general purpose machinery and electrical equipment production declining by a cumulative 14.9%

According to the Eyewitness News, the metals industry was hit hard, heavily impacted by protracted mineworkers strikes and then power failures beginning in November last year.

Seifsa’s concerns are exacerbated by the fact that government has been tentative around the R20 billion requested by Eskom to procure more diesel fuel.

The state utility’s spokesperson, Andrew Etzinger said that load shedding is likely to become a regular occurrence should Eskom not receive the required funding.