Despite a decline in the South African gold mining industry over the past few years, gold production in the country remains the second largest in Africa, and remaining gold mines are still expected to have a significant lifespan, says ENSafrica senior associate Mihlali Sitefane and associate Zinzi Lawrence.

“The South African gold mining industry has a degree of longevity and is expected to continue being a major contributor to the country’s economy. Significant gold reserves remain untapped in Africa, with countries such as Ghana, Mali and Burkina Faso featuring prominently among the world’s top gold producers, so it is anticipated that major mining companies will continue to expand their presence on the African continent.”

While the country has previously dominated as the primary global gold producer, production declined, owing to issues such as the increasing costs of mining, fluctuating gold prices, regulatory uncertainty and depletion of reserves, the two explain.

They add that local gold mining operations face numerous challenges that have impacted on the sector’s productivity, profitability and sustainability. Further, having some of the world’s deepest gold mines present challenges that are unique to the country.

These challenges stem from policy, social, and energy security issues that lead to increases in operating costs, which, in turn, result in profit margin squeezes, decreased productivity, and fluctuating investor confidence.

Sitefane and Lawrence advise mining companies to develop innovative strategies to ensure long-term competitiveness and viability in South Africa’s gold mining industry.

They further say that “the burden of preserving the gold mining industry must not rest solely on mining companies. Government must recognise that it, too, has a role to play in ensuring regulatory certainty to increase investor confidence, investing in technological research, and developing and committing to beneficiation”.

Despite challenges, Sitefane and Lawrence add that there is potential for growth in the local gold mining industry.

They say that realising that potential depends on gold mining companies’ investing in new technologies and extraction methods to effectively extract gold so as to increase the life span of local gold mines, and they also encourage the collaboration between junior and large-scale mining companies to increase gold production.

Some gold mining projects would not be economically suitable for large-scale companies, but they can yield better returns for junior miners, Sitefane and Lawrence add.

“This is an opportunity in the sector that must still be fully explored, as these synergies could yield great returns in the industry and contribute to sustainable job creation and economic development.”

While gold remains a valuable mineral with several domestic and commercial applications and is regarded as a stable investment by global investors, mining companies need to continue improving to continue deriving value from gold.

They add that more investments should be channelled towards newer and greener gold extractive technologies, as well as more sophisticated metallurgical processes, to treat gold ores once they have been mined.

“Investment in greener technologies is fundamental to ensure that gold mining entities thrive in a world that is quickly moving towards a low carbon economy. It is paramount to ensure that key stakeholders in the sector, such as employees and communities, are not left behind as the industry continues to grow,” conclude Sitefane and Lawrence.