Thomson Reuters GFMS ranked South Africa sixth in global production in 2012, when it fell behind Peru and produced 177.8 tonnes of gold.
KROMDRAAI/JOHANNESBURG (REUTERS) – A hand drill lying in the hillside tunnel of a 19th-century South African gold mine testifies to the back-breaking labour by black miners that built what was once the world’s biggest bullion industry.
But even with basic tools and cheap labour, costs overran returns at the Kromdraai gold mine north of Johannesburg, which listed in London in 1893 and closed in 1914.
A century later, South African’s remaining gold mines, which still employ a mostly black and lowly paid workforce, look set to follow the same fate, as the sun sets on an industry that has produced a third of the bullion extracted from the planet.
Gold’s sliding price and surging costs are hitting an industry that laid the foundations for Africa’s largest economy but has been slowly dying for decades as ore grades decline and shafts reach depths of 4 kms, the world’s deepest.
Unrest is also flaring as restive miners demand more for their toil after over a century of low wages linked to a system of migrant labour that outlasted the end of apartheid in 1994.
A weaker rand currency, which lowers local costs for domestic gold producers, has given them a temporary life-line of sorts but not enough to halt the terminal decline.
According to Roger Baxter, chief economist at South Africa’s Chamber of Mines, in the fourth quarter of 2012 the price of gold averaged 509,000 rand per kilogramme, but it fell in the first six months of this year to under 400,000 rand/kg.
“This precipitous fall in the price … has been the biggest decline that has taken place since the 1920s,” he said.
“At a 400,000 rand a kilo gold price, our estimate is that about 60 percent of the industry is in loss-making territory.”
This spells doom for an industry that accounted for 79 percent of world production in 1970 in its heyday, when Johannesburg, still ringed today by the hill-like humps of eroding dusty mine tailings, was dubbed the “City of Gold”.
Thomson Reuters GFMS ranked South Africa sixth in global production in 2012, when it fell behind Peru and produced 177.8 tonnes of gold, just 6 percent of the world total, the country’s worst year for production since 1905.
HAEMORRHAGE OF JOBS
Gold may have lost much of its lustre for the South African economy, accounting for only around 1.5 percent of gross domestic product, but it is still the country’s main mineral export, which in 2012 fetched 72 billion rand, about 10 percent of all export earnings.
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