Fears gold is slowly losing its lustre
Back in 1987, President Cyril Ramaphosa – then a 34-year-old labour union leader – led 300,000 black miners in a strike that symbolised resistance to the apartheid regime. Now, striking gold workers face a less politically charged battle, but one they cannot win.
The 130-year-old gold industry – which has produced half the bullion ever mined on
Earth – is locked in the final stages of a decades-long death spiral. Most gold mines are unprofitable at current prices. Dwindling output has cut gold’s contribution to about 1% of the economy, down from 3.8% in 1993. While the industry’s demise won’t reverberate in the way it once would have, the mines minister has criticised Gold Fields’ plan to cut jobs as the ANC seeks to shore up its base before elections next year.
Mines run by Gold Fields and Sibanye Gold have been halted by strikes over job cuts and wages. Both producers cut output projections for this year.
The gold industry now employs 100,000 people, less than a fifth of the number that used to power the apartheid economy. The economic and social impact of a further contraction in the industry will be magnified as every gold miner supports between five and 10 dependents, while creating two jobs elsewhere, according to SA’s minerals council.
Higher wages and power prices, combined with the geological challenges of the world’s deepest mines, will mean more job losses and less production over the next five years, said Gold Fields chief executive Nick Holland.
“When you work out the math, when you keep doing that year after year, you’re going to go out of business quickly,” Holland said. “The industry will just continue to see a slow death.”
Sibanye, SA’s biggest producer, faces wage strikes at three of mines. CEO Neal Froneman acknowledges that pressure is building on the miner to resolve its safety problems after about 20 fatalities this year. If that can be done, he is optimistic gold mines can survive a little longer.