South Africa's key gold industry faces moment of truth
The end of gold’s 12-year bull run has hit South Africa, home to one of the world’s richest gold reserves, especially hard.
Lower gold prices, which have dropped more than 25% this year, ageing mines, labour strikes and higher operating costs have together weighed down on the sector in the world's sixth largest producer of the metal.
Early this year the industry shed over 14,400 jobs, bringing the total remaining jobs to 126,587 in September, according to Statistics South Africa.
Last year the country's gold output fell to merely 167 tonnes, the lowest since 1905.
A case in point is the 70-year old Blyvooruitzicht gold mine, located about 80 km southwest of Johannesburg, which was shut down in August. According to Bloomberg, the closure has seriously impacted local businesses.
Workers, who thronged the local Blyvoor Spar grocery store for 32 years, now shop for only the essentials.
"You can see the despair on their faces," grocery store owner Desiree Barreiro was quoted as saying.
South Africa’s gold production has plummeted 83% in the last ten years and the short-term outlook doesn’t look any healthier.
Andy Jackson, an analyst at Sprott Global Resource Investments, said in October that he expected most existing gold mines —and some platinum ones— to close as a product of a steady decline over the coming years.
South Africa's gold mining industry ranked number one in the world for a century before losing the top spot to China in 2007.
Today, South Africa is ranked sixth in the world, dropping below Peru's output and at 178 tonnes only some 6% of global production.
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