UPDATE 5-S.Africa unions plan July strike over power crisis

(Adds NUM comment)

By Phakamisa Ndzamela

JOHANNESBURG, June 11 (Reuters) - South Africa's COSATU labour federation said on Wednesday it would call a national strike next month to protest against job losses linked to a power crisis.

The news helped boost spot gold prices XAU= by nearly $3. COSATU said the strike would be the culmination of a series of protests in South Africa's nine provinces from July 2.

The National Union of Mineworkers (NUM), representing 320,000 workers at South Africa's giant gold and platinum mines, said it would join in the strike action.

South Africa has suffered electricity shortages since the start of the year as power utility Eskom [ESCJ.UL] struggles to generate enough power to meet demand.

The power shortages have dented economic growth, which fell to a 6-1/2-year low of 2.1 percent, quarter-on-quarter, in the first three months of 2008, unnerved investors and heaped pressure on President Thabo Mbeki.

Some mining groups have warned of job losses if mines are left without power again. Most mines are operating at only 95 percent of normal power requirements.

"The action is ... in response to the danger of retrenchments (layoffs) in the mining sector and elsewhere due to Eskom's decision to reduce electricity supply to industry and its threat to oppose any new major construction initiatives," COSATU said.

"It will begin on 2 July 2008, with provincial action, continuing throughout the month of July and culminating in a national stayaway on 30 July," said the 2-million strong labour body, an ally of the ruling ANC party.

The NUM said it would decide later this week what form its strike action would take.

"As COSATU's biggest affiliate we plan to participate in the action (strike). There is a meeting planned for later this week to decide whether we will strike in a series of protests or if we shall only join for a week or the national strike on July 30," NUM spokesman Lesiba Seshoka told Reuters.

Mining companies and other major electricity consumers have had supplies rationed since the national grid came close to collapse in January, forcing big gold and platinum mines to shut down for five days.

Gold prices were already firmer on the back of firmer oil prices which encouraged bullion buying as an inflation hedge.

UNDERSPENDING

The power crisis is the result of years of underspending on electricity generation capacity. State-owned Eskom, which provides 95 percent of South Africa's electricity, plans to boost its 37,761 megawatt capacity by almost 15,000 MW, spending 1.3 trillion rand ($163.5 billion) by 2025.

To raise funds for its expansion programme, Eskom asked regulators to approve a doubling of electricity tariffs over two years, provoking a backlash from the ANC and its labour allies, who said it would hurt the poor and stoke inflation.

The utility has since backed off, agreeing in principle to raise tariffs gradually over five years. The National Energy Regulator of South Africa is due to announce a decision on the tariff structure next week.

COSATU said Eskom's proposed tariff increases would put thousands more jobs at risk. Companies, already facing sharp increases in the cost of fuel and interest rates, would either lay off workers or be forced to close down, it said.

Eskom has urged industry and residential consumers to cut electricity consumption by at least 10 percent to avoid rolling power blackouts known as load-shedding in South Africa. (Editing by Robert Woodward)