Back in 1987, South African President Cyril Ramaphosa — then a 34-year-old labor union leader — led 300,000 black miners in a strike that symbolized resistance to the apartheid regime. Now, striking gold workers face a less politically charged battle, but one they cannot win.
The nation’s 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 of South Africa’s gold mines are unprofitable at current prices.
Photo: Reuters
Dwindling output has cut gold’s contribution to little more than 1 percent of the South African economy, down from 3.8 percent in 1993 — the year before former South African president Nelson Mandela’s African National Congress (ANC) won the country’s first democratic elections.
While the industry’s demise would not reverberate in the way it once would have, the minister of mineral resources has criticized Gold Fields Ltd’s plan to cut jobs as the ruling ANC seeks to shore up its base before elections next year.
Operations at mines run by Gold Fields and Sibanye Gold Ltd in South Africa have been halted by strikes over job cuts and wages respectively.
Both producers cut their output projections for this year.
South Africa’s gold industry employs just more than 100,000 people, less than a fifth of the number that used to power the apartheid economy.
The economic and social effects of a further contraction in the industry would be magnified, as every gold miner supports between five and 10 dependents, while creating two jobs elsewhere, the Minerals Council South Africa said.
Higher wages and energy prices, combined with the geological challenges of the world’s deepest mines, would mean more job losses and less production in the country over the next five years, Gold Fields chief executive officer Nick Holland said.
“When you work out the math, when you keep doing that year after year, you are going to go out of business very quickly,” Holland said in an interview. “The industry will just continue to see a slow death.”
Sibanye, the country’s biggest producer, faces wage strikes at three of its mines.
Chief executive officer Neal Froneman has acknowledged that pressure is building on the miner to resolve its safety problems after more than 20 fatalities this year.
If that can be done, he is optimistic that South Africa’s gold mines can survive a little longer.
South Africa’s gold output plunged 19 percent in September, the biggest decline in almost four years.
“It’s an industry in decline, yes, and if sunset means the sun setting in 10 years or 15 years, that’s still 10 or 15 years away,” Froneman said in an interview last month. “There is still money to be made.’’
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