With the collapse of the gold price and the sector’s tough wage talks under way, one wonders just where South Africa’s gold production is heading.
Even as things stand, South Africa’s status as a gold producer has taken a big knock.
From being the world’s largest gold producer only six years ago, South Africa has been pushed into sixth place, with China the largest gold producer by far, followed by Australia, the US, Russia, Peru and then South Africa.
With the US Federal Reserve signalling a cut in bond buy-back and with the availability of easy money set to diminish along with global risk, the gold price has taken a hammering.
In rand terms, the price has fallen below R400 000/kg, which is a 20%-plus decline compared with the R509 000/kg in the last quarter of 2012.
“The precipitous fall in price has taken place in the first six months of this year and even rand weakening hasn’t been enough to compensate for the significant US dollar decline, which is the biggest decline since the 1920s,” Chamber of Mines senior executive: economics and strategy Roger Baxter pointed out to Mining Weekly.
Things have changed fast. Even as recently as 2007, South Africa still ruled the production roost and in the last 126 years of recorded history, it produced a third of all the gold that is known to have been produced in the history of humankind – a colossal 51 000 t.
The gold mining sector played a critical role in helping South Africa to become the most industrialised country in Africa by far and, surprisingly, even in 2012, it was South Africa’s biggest export earner, accounting for about 10% of South Africa’s merchandised exports.
Although it is second to platinum in employment, with multiplier effects added in, it continues to have a big gross domestic product footprint of more than 3%.
Gold mining employs 142 000 people and pays R22-billion in salaries and wages a year, giving yearly per capita earnings of R155 000 a person a year.
Last year, it paid R2.1-billion in corporate tax, which rises far higher when the electricity levy, skills levy and royalties are added, with skills development alone amounting to a direct R200-million and an indirect R500-million a year.
Last year, gold’s capital expenditure totalled nearly R14-billion, and R1.2-billion was paid to investors in dividends.
Not too shabby at all, despite being in sixth place production-wise.