South African Gold Mines Are on the Brink of Death

The comments above & below is an edited and abridged synopsis of an article by Jan De Lange

A 2006/2007 study predicted that virtually all of South Africa’s large gold mines would be shut by 2014. This turned out to be untrue, mostly due to the unpredicted depreciation of the rand, which pushed up the local gold price.

South African Gold Mines Are on the Brink of Death | BullionBuzz

A gold mine head gear, Johannesburg South Africa

Now, one of the people involved in the study says AngloGold’s announced mine closures are the beginning of the end.

The study advocated a massive change in how gold mines operate. Recommendations included 24-hour mining days and the control of water and power prices, despite these being outside the industry’s control.

“Unfortunately, nothing came of it,” said Gavin Hartford, a labour sociologist who was appointed to get the mines and unions to agree on these plans. “Instead, the rand weakened and blew life into the mines past 2014.”

“We are now clearly at a point where the gold industry’s end has arrived. We have to expect large-scale job cuts.” The price of electricity has risen by 300% over the past 5 years, Hartford pointed out. “When we did the study, power amounted to about 6%, on average, of a mine’s expenditure. Now it is 30%.”

Hartford says he recently saw numbers from another major gold producer showing that its mines have no chance of survival.

At the time of the 2007 study, the cost of mining a ton of ore was rising by 11.7% per year, and production per employee was dropping by 2.9% per year.

If these trends had continued, they would have led to the gold industry’s closure in 2014. It was estimated that if the cost inflation in mines could be kept under 6%, it would buy the industry another 4 years. If the falling productivity could be stopped, then the mines would win 8 more years.

Hartford and other sources in the mining industry said platinum mines were also likely to start announcing mass retrenchments.

Please share...Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInPin on PinterestShare on RedditShare on TumblrDigg thisShare on StumbleUponBuffer this pageFlattr the authorEmail this to someonePrint this page

Leave a Reply

Your email address will not be published. Required fields are marked *