Share

SA gold mines are on the brink of death

Johannesburg - AngloGold Ashanti’s announcement that it will close two mines and retrench 8 500 workers is only the first of many large-scale job cuts that were predicted in 2007.

A study done in 2006 and 2007 had predicted that virtually all of South Africa’s large gold mines would be shut by 2014. This turned out not to be true, mostly due to the unpredicted depreciation of the rand, which pushed up the local gold price.

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

The 2007 study, conducted by the Chamber of Mines through the Monitor Group, had 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 at the time appointed to try and 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 five years, he 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, which incontrovertibly show that its mines have no chance of survival.

The 2007 study made terrifying observations.

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

If these trends had gone unhindered, they would have led to the closure of the gold industry in eight years, then meaning 2014. It was estimated that if the cost inflation in mines could be kept under 6% it would buy the industry another four years.

If the falling productivity could be stopped, then the mines would win eight more years.

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

“It is actually far worse at the platinum mines. It is unbelievable that there have not been any large job cuts yet,” said one source.

SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox

Read Fin24's top stories trending on Twitter:

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.87
+0.3%
Rand - Pound
23.85
+0.2%
Rand - Euro
20.38
+0.3%
Rand - Aus dollar
12.32
+0.2%
Rand - Yen
0.12
+0.3%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders