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To: long-gone who wrote (15017)	7/29/1998 6:12:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116756

ANALYSIS-SAfrica gold firms vow tough line on costs 11:15 a.m. Jul 29, 1998 Eastern By Darren Schuettler JOHANNESBURG, July 29 (Reuters) - South African gold companies, enjoying fat profits again after several lean quarters and a painful restructuring, have vowed to resist the temptation to return to their old free-spending ways. South Africa's slumping currency has powered the rand gold price to new heights in recent weeks, but a sharp depreciation also brings inflation, higher costs and the urge to mine marginal areas. As the industry rolled out strong quarterly results this week, executives pledged to keep a tight grip on costs. ''Greater effort will have to be made to minimise the effect of inflation on our margins. It will require a further commitment from management and labour,'' senior JCI Gold (JCGJ.J) executive Gordon Miller warned on Tuesday as JCI units reported double-digit profit gains in the June quarter. Anglogold Ltd (ANGJ.J) and Gold Fields Ltd (GFLJ.J), respectively the world's two biggest gold producers, also reiterated their commitments to keep inflation-driven costs down as they savoured a stronger rand gold price. Despite union calls to halt retrenchments in view of the gold rebound, companies say they will not base the industry's long-term future on short-term market gyrations. Most mines have slashed jobs, discarded unprofitable shafts, and incurred heavy restructuring charges in a bid to trim costs that were among the highest in the world. ''They have been through one of the most difficult periods in their history. There has been major pain and major restructurings and I don't think they will easily go back to their old ways,'' said Nick Goodwin, an analyst with Fedsure Asset Management in Johannesburg. The rand has lost 20 percent of its value against the U.S. dollar since late May, sparking a rally in the price of gold denominated in rand. While the rest of country despairs over a battered currency, South African gold miners -- who sell bullion for dollars, but pay costs in rand -- are smiling. The rand gold price has soared to over 1,800 rand per ounce in the wake of the currency crisis, compared to 1,500 rand on June 1. The downside to this good news is inflation -- a concern highlighted by South Africa's central banker last week. ''Our problem is that depreciation normally leads to an increase in inflation and therefore a rise in the cost of production,'' Reserve Bank Governor Chris Stals told Reuters. ''So whatever advantages the gold mining industry or other export industries may get out of the depreciation, there is always a danger that it can be very short-lived and absorbed again very soon by rising costs of production,'' Stals said. If the rand remains weak, as most economists expect, and profit margins continue to bulge, inflation pressures will creep up on the gold companies, analysts said. ''I would say it will be 12 to 18 months before we notice an increase in costs due to those reasons,'' Goodwin said. But he noted mine executives are more committed today to containing costs, particularly in dollar terms, as they vie to compete with leaner international gold companies in Canada, the United States and Australia. South African companies averaged cash costs of just over $300 per ounce in 1997, compared to $216 per ounce for U.S. firms, $221 per ounce for Canadian companies and $261 per ounce for Australian miners. Tony Cadle, gold analyst at Rice Rinaldi Turner and Co, said labour negotiations next year will be a key component of the industry's future costs. South African mines are very labour intensive with employee costs accounting for about half of an average mine's production costs. Last year the gold industry struck a watershed two-year wage agreement which entered its second year this month with an average nine percent wage gain. ''They have a minimum one-year window until the next wage talks,'' Cadle said, adding that union negotiators will likely demand a wage increase matching the rate of inflation. Economists have forecast that South Africa's inflation rate will be around eight percent by December, year on year. ((Johannesburg newsroom, 27 11 482 1003 newsroom+reuters.co.za)) Copyright 1998 Reuters Limited.

To: long-gone who wrote (15017)	7/29/1998 8:15:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116756

Yeltsin cuts holiday short as protest endures 07:03 p.m Jul 29, 1998 Eastern By Adam Tanner MOSCOW (Reuters) - President Boris Yeltsin unexpectedly cut short a lakeside holiday on Wednesday as miners continued blocking the Trans-Siberian railroad and a former government advisor said Russia was technically bankrupt. Yeltsin, 67, left for northwest Russia on July 18, a day after the parliament approved parts of an economic austerity plan that helped win Moscow $22.6 billion in international credits. He was expected to stay on holiday until mid August. ''Now we are moving from the mid-summer period towards the autumn period,'' a relaxed and fit-looking Yeltsin told reporters before boarding the presidential plane back to Moscow. ''That's why I need to get prepared and go into this period decisively without any hesitations, to pursue a clear line. We have to get ready for this period, to push and press and for that the president is needed,'' he added. Asked whom he had to push, Yeltsin burst out laughing and said: ''Everybody else.'' Meanwhile, in Siberia hundreds of Russian miners who have not been paid in months kept up their pressure on the Russian government by blocking the strategic Trans-Siberian rail link for the third consecutive day. They ignored growing complaints from nuclear scientists, regional officials and irate train passengers who called on them to halt their blockade. ''People from the blocked passenger trains are getting off and some are very aggressive -- they even try to beat up the miners. We have police units there to prevent any fighting between them,'' said a spokesman for the Chelyabinsk region governor. In Moscow, Andrei Illarionov, a former economic adviser to the Yeltsin's reform team, said the government was technically bankrupt and would have to devalue the rouble. ''The government is not able to refinance and service its domestic debt in a traditional manner. That is what has happened in the last two months. From a technical standpoint, the Russian government is already in the state of bankruptcy,'' he said. Now the government's foremost domestic independent critic, Illarionov said the central bank had squandered reserves and would have to devalue its currency by 50 percent. The dire warning comes a week after Russia received pledges of $22.6 billion in foreign aid which the International Monetary Fund has said would give it breathing room for reforms. Yeltsin has said he expects the autumn to be ''politically rather difficult'' owing to tough austerity measures demanded by the IMF and other creditors. The Communist-dominated lower house of parliament, the State Duma, has refused to approve some of the measures and other groups, including influential oil industry chiefs, have criticised the government's plans to raise taxes. Communist deputies have also launched a complex impeachment process against Yeltsin over his role in the breakup of the Soviet Union seven years ago. The bid is unlikely to succeed but it will further exacerbate political tensions. Yeltsin, whose unexpected decisions are a hallmark of his presidency, may also have been motivated by more prosaic concerns in returning to Moscow. Poor weather and frequent rain had kept him indoors and put off hopes to go fishing. The Kremlin press service said Yeltsin would spend two days at his Gorky-9 country residence just outside Moscow but declined to say where he would go afterwards. The Kremlin on Wednesday also released a significant Yeltsin decree handing over control of the country's prison system to a civilian administration by the end of next month. Despite the IMF loans, Russia's jittery financial markets have suffered in recent days amid fears about the government's ability to improve tax collection and avert serious labour unrest over chronic wage delays. But on Wednesday leading shares were up more than one percent. Prime Minister Sergei Kiriyenko invited foreign investors to meet him on Thursday to describe the government's anti-crisis programme. ''I think they want investors' opinion on how to improve the situation,'' an invited Western bank representative said. Copyright 1998 Reuters Limited.