Top gold producers in SA downgraded by HSBC to ‘sell’

South African top gold producers AngloGold Ashanti  (NYSE:AU) (JSE:ANG) (ASX: AGG), Harmony Gold (NYSE:HMY) and Sibanye Gold (NYSE:SBGL) were downgraded to sell on Monday by HSBC, which said the lower price of the metal is cutting margins at the company currently dealing with labour disputes.

The mining industry in Africa’s No.1 economy failed to contain costs during a decade-long bull market in gold and it is now badly placed to manage the pressures that come from lower prices, HSBC analysts led by Johannesburg-based Derryn Maade wrote in a note released last week, reports Commodity Fundamentals.

Gold producers represented by the Chamber of Mines of South Africa (CMSA), are in dispute with South Africa’s four biggest labour unions after they offered a 5% raise that was rejected by workers.

South Africa’s two main mining sectors, platinum and gold, are under pressure from spiralling costs and weaker commodity prices. Their representatives have warned than any significant increase in wages will risk more job losses and trigger closures.

The ongoing mining wage negotiations have been considered years and are expected to run until the end of the year.

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