By Jennifer Yousfi
Gold and platinum futures reached new highs on news that South Africa's state-owned utility Eskom Holdings Ltd. (OTC:ESKAY) was not able to keep up with demand, resulting in power shortages that curtailed business operations.
After numerous unscheduled cuts in the power supply, Eskom was forced to request its 138 largest customers reduce their energy usage.
Customers were told that the "safety of plants and people should be a priority," Eskom spokesman Andrew Etzinger told Bloomberg News. "[The request] was driven by the need to ensure the integrity of the electricity grid system and prevent a worsening of the situation."
Mining companies were particularly hard hit. Shares of Gold Fields Ltd. (GFI) fell 9.28%, AngloGold Ashanti Ltd. (AU) stock slumped 4.78%, Anglo American PLC (AAUK) was down 6.56%, and Harmony Gold Mining Co. (HMY) lost 7.41% on Friday.
Due to infrastructure problems, many fear the power problems will continue for as much the next five years, which is bad news for soccer fans [the World Cup will be held in South Africa in 2010] and South African investors alike.
"The power cuts, which have become increasingly serious and widespread, will undermine the [South African] government's target of accelerating economic growth to 6% by 2014," Mike Davies, an analyst at the Eurasia Group, said in a note, MarketWatch reported.
Real GDP grew at about 5% in 2007.
South Africa is the world's largest producer of platinum and is second only to China in the production of gold. Platinum reached a daily high of $1,686.00 and gold reached a high of $921.00 on Friday.
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