Huge fall in South African gold output in October
South African gold output continues to decline with a big fall in October, largely due to the wildcat strikes which closed down much of the industry during the month.
Posted: Tuesday , 11 Dec 2012
LONDON (Mineweb) -
According to Statistics South Africa, the country’s gold output fell by 45.7 percent in volume in October while total overall mineral production was down 7.7 percent compared with the same month in 2012. Copper production fell by an even greater 56.4% year on year, but this is far less significant for the country’s economy.
Seasonally adjusted mining production decreased by 7.9% in October compared with September. This followed month-on-month changes of -7.0% in September and 2.4% in August.
The major cause of the fall in gold output was, of course the devastating effects of the mine wildcat strikes which by October had started to fall away at the platinum and other mines. These hit the gold mines hard at that stage with production by the country’s two top gold miners, AngloGold Ashanti and Gold Fields virtually shut down for the month in perhaps partly politically-motivated inter-union strife. The strikes often involved violence and intimidation, some of which is still lingering on, although in a minor manner.
For the South African economy as a whole the labour tribulations experienced in the mining sector, which also had a minor knock-on effect in other industries. Overall the country’s economic growth has been hit quite hard – September quarter statistics showed that GDP growth fell to an annualised 1.2% - the lowest growth rate since 2009 – and October figures may well see growth slow further as the fall in gold production and earnings has an impact.
Many of South Africa’s key earning gold and platinum mines are at best marginal at current metals prices and with labour accounting for a large proportion of mine costs, the problems being experienced by the industry are bound to lead to mine closures and/or labour number reductions which may not be acceptable to the country’s government. Should this happen there will undoubtedly be renewed calls from factions in the ruling African National Congress party for nationalisation of the country’s mines – a policy not favoured at the moment by the government itself.
However, coming back to the gold output fall, South Africa is already slipping down the rankings of major gold producing nations – where it was the world’s dominant producer for virtually the whole of the 20th Century and the first few years of the current one, and with it seeing reductions in gold output for virtually every month of 2012 it will undoubtedly slip further when the annual statistics are tallied. Last year it was the fourth largest producer after China, Australia and the USA and this year it could well fall another notch – below Russia.