South Africa's electricity crisis was behind a drop in the country's gold production in the first quarter of the year, the Chamber of Mines said on Tuesday.

In the first three months of the year, South Africa's gold production fell by 15.6 percent to 52 228 kilogrammes from the last quarter of 2007, the Chamber said in a statement.

On a year-on-year basis the rate of decline in gold production was 16.8 percent in the first quarter of 2008.

It was "vital" that there not be a repeat of the crisis which effectively closed the gold industry in January, the Chamber said.

"Rather, a more strategic approach to managing the electricity challenge is required, including ensuring that tightness in the electricity market is handled better in future and that all electricity users become more energy efficient."

It said that even the limited electricity supply to gold mines in February had proved "exceptionally challenging" and had almost forced some mines to close parts of their operations, at the cost of jobs.

After intervention by The Chamber, the electricity supply to "some mines on a case-by-case basis" had been increase to over 90 percent.

The Chamber said it had warned of a probable 15 percent to 20 percent decline in production because of the electricity restrictions.

It said the gold mining industry accounted for R40-billion, or 7.5 percent, of South Africa's merchandise exports, and employed 168 860 workers, or 34 percent of total mining employment, in 2007.

As far as its own gold mine members were concerned, the Chamber said their production had declined by 17.2 percent to 43 941 kilogram in the first quarter of 2008 when compared to the fourth quarter 2007.

An 11.5 percent decline in tons milled, plus a 6.4 percent decline in average grade led to the fall in production.

On a year-on-year basis, Chamber member production fell by 19.3 percent in the first quarter of 2008, as the 3.5 percent decline in tons processed through the mills was insufficient to compensate for the 16.4 percent decline in the average grade recovered, it said.

Sapa