49r--This is an interesting read about the state of the mining industry.
Union, government and gold-mine
management confront gold crisis
1.58 p.m. ET (1859 GMT) February 26, 1998
JOHANNESBURG, South Africa (AP) - Gold prices have plummeted,
extraction costs have soared and 100,000 miners are in danger of
losing their jobs unless unions, companies and the government find
a plan to rescue the once-lustrous South African gold industry.
Mindful their industry teeters on collapse, South Africa's gold
interests began plotting a strategy Thursday to bolster gold
companies and prevent massive layoffs.
Global economic forces have driven gold prices to their lowest level
in two decades. South Africa has seen prices drop from more than
$400 per ounce a year ago to about $300 per ounce.
With the world's deepest mines, South African mining companies
spend about $300 to extract each ounce. They must now cut
production costs to survive. Some mines may have to be closed.
Up to 100,000 gold miners could lose their jobs this year, National
Union of Mineworkers President James Motlatsi warned more than
300 delegates as he opened the two-day "gold summit.'' At least
42,000 miners lost their jobs last year.
The miners' union called for a minimum 12-month moratorium on
layoffs while solutions were being sought. The miners want
government assistance for marginal mines as well as assistance in
developing alternative jobs for the newly unemployed.
Labor Minister Tito Mboweni ruled out a government bailout for
gold mines, saying it would be wrong to use taxpayers' money to
artificially maintain production and employment in an industry in
long-term decline. I guess that means no IMF bailout for real money!
Gold production peaked in 1970 at 1,000 tons. Production last year
was an estimated 490 tons. Some older mines have been depleted.
Mine operators go through old tailings, using new technology to
extract gold traces left behind decades ago.
Gold prices have dropped largely because governments and private
investors are forsaking gold for other investments now that trade
and investment barriers are dropping around the world. |
