South African gold production falls to 1931 levels.
allafrica.com
>>THE strong rand and steep rises in production costs have hammered South African gold production, amid warnings that the decline could accelerate at the cost of thousands of jobs and lost export earnings.
Gold production in SA fell 8,8% to 342,7 tons last year, the lowest level since 1931, the Chamber of Mines said yesterday.
The fall in production has led to massive job losses, with Harmony alone cutting more than 8000 jobs last year. It plans to offload another 4900 this year.
DRDGOLD also cited the strong rand when it liquidated its two North West operations a month ago, in a move that could see the shedding of 6000 jobs.
AngloGold Ashanti, the world's second-biggest gold producer, said it had shut its Ergo gold-processing unit on the East Rand, affecting 2000 jobs.
Chamber of Mines chief economist Roger Baxter said yesterday the decline in the gold sector could accelerate, unless all those pushing up the costs of mining - including labour - moderated their demands.
He said that with falling revenue and rising costs, 10 mines, employing 90000 people and accounting for about half of SA's output, are marginal or loss-making at the current rand gold price, excluding capital expenditure.
"While the industry has consistently focused on improving productivity and reducing costs, there are simply too many costs the industry does not have control of, which places inordinate pressure on the sector," he said.
He said that while the gold price in dollars rose 12,6% last year to $409/oz, this benefit was wiped out by the appreciation of the rand, with the end result that the rand price of gold fell 3,8% to an average of R84785/kg.
SA's gold producers were losing out on the gold boom which was benefiting their competitors in dollar-denominated territories.
"The rand gold price had already fallen a notable 15,8% in 2003 versus 2002," Baxter said.
Gold analyst Nick Goodwin of Tsec said that for the moment, SA's gold industry "looks like it is becoming a sunset industry".
"However, that doesn't mean life will stop tomorrow."
He said that while the industry wants labour wage rise demands to be moderated, he was sceptical that the unions would listen, and predicted that higher wages would result in fewer jobs.
Baxter warned that mining companies themselves may be unable to slow down the fall in production, which would also mean a fall in employment in gold mining. "Complicating the issue has been the cost pressures that the industry has faced over the past three years."<< |
