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SA’s gold mines in crisis as profitable producers shrink to 20%

The state of SA’s gold mining industry is worse than first thought, with fewer than 20% of gold mines making money at prevailing prices – while large job cuts are forecast in coming years, following decades of steeply falling employment.

Data from the Minerals Council SA (formerly the Chamber of Mines), released as wage talks in the sector have kicked off, show that 80% of SA’s gold mines, once the powerhouse of the country’s economy and global gold industry, are unprofitable at prevailing gold prices of about R520,000/kg.

“Looking at the ‘spot price of gold’ and the ‘spot all-in costs’ [cash costs, sustaining capital and new investment costs], we think that over 80% of companies are not covering their costs at today’s gold price,” said Henk Langenhoven, the council’s chief economist, adding “very few companies sell [at] spot prices”.

Gideon du Plessis, the general secretary of trade union Solidarity, pointed out that the Minerals Council had as usual opened wage talks by painting a gloomy picture of the industry to motivate for the lowest possible wage increase.

Source: myjoy

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