South Africa, producer of 30 percent of the gold in circulation today, is unable to profit fully from record prices for the precious metal as a crippling electricity crisis hampers production.
The price of gold, of which South Africa was the top producer from 1906 to last year, when it was dethroned by China, passed the US$1,000-an-ounce mark for the first time on Thursday.
"The higher prices should help the economy ... but we can't make full use of it because of the energy crisis," said Mike Schussler, an economist with investment firm T-Sec.
State power utility Eskom, its ageing infrastructure incapable of keeping up with the demands of a booming economy, started imposing intermittent savings cuts from late last year, paralyzing the mining industry for five days in January.
Subsequently, it imposed a quota of 90 percent of historic use on mines in the country, recently lifted to 95 percent, to keep the country afloat while building new electricity infrastructure.
Gold production dropped 16.5 percent year-on-year in January.
"Operating with 90 percent electricity supply has proved especially difficult," said Chamber of Mines chief economist Roger Baxter.
Reliable electricity supply is crucial to ensuring safe working conditions underground, including proper ventilation and water drainage.
Savings were thus accrued by reducing the use of production equipment.
"The impact [of the power rationing] is not 10 percent of production, it can be 20 percent," Baxter said.
Mining group Gold Fields said last month that the energy crisis could cut long-term production by up to a fifth and may force it to shed nearly 7,000 jobs.
Company spokesman Andrew Davidson said on Friday the higher gold price was welcome.
"Obviously any increase of the gold price is beneficial for the gold producers ... it is a great help," he said.
But "if we are not receiving enough power, we will have to close some shafts, therefore only more power will assist us to minimize job losses," he said. "If we could produce more, it [the higher price] would be good for exports, for employment and the economy in general."
"This is an opportunity lost for South Africa," he said.
This was all the more depressing, the analysts said, as a gold price hike would ordinarily have been just what South Africa needed to lift it out of a patch of economy slowdown.
Economic growth slowed last year to 5.1 percent from 5.4 percent the previous year, and the government last month cut its prediction for this year from 5 percent to 4 percent.
Baxter said gold price rises in 2005 and 2006 helped finance the restoration of ageing wells and the opening of new ones, enabling mines to increase output.
Gold mining contributes 2 percent to South Africa's overall GDP.
Overall, things were not looking rosy, Schussler said -- pointing to South Africa's negative balance on its trade and current accounts, the declining value of the rand (currently at US$0.128), and climbing inflation.
Consumer inflation stands at 9 percent, way outside the central bank's target of between 3 percent and 6 percent and interest rates are at their highest in years.
PROVOCATIVE: Chinese Deputy Ambassador to the UN Sun Lei accused Japan of sending military vessels to deliberately provoke tensions in the Taiwan Strait China denounced remarks by Japan and the EU about the South China Sea at a UN Security Council meeting on Monday, and accused Tokyo of provocative behavior in the Taiwan Strait and planning military expansion. Ayano Kunimitsu, a Japanese vice foreign minister, told the Council meeting on maritime security that Tokyo was seriously concerned about the situation in the East China and South China seas, and reiterated Japan’s opposition to any attempt to change the “status quo” by force, and obstruction of freedom of navigation and overflight. Stavros Lambrinidis, head of the EU delegation to the UN, also highlighted South China Sea
The final batch of 28 M1A2T Abrams tanks purchased from the US arrived at Taipei Port last night and were transported to the Armor Training Command in Hsinchu County’s Hukou Township (湖口), completing the military’s multi-year procurement of 108 of the tanks. Starting at 12:10am today, reporters observed more than a dozen civilian flatbed trailers departing from Taipei Port, each carrying an M1A2T tank covered with black waterproof tarps. Escorted by military vehicles, the convoy traveled via the West Coast Expressway to the Armor Training Command, with police implementing traffic control. The army operates about 1,000 tanks, including CM-11 Brave Tiger
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, said it expects its 2-nanometer (2nm) chip capacity to grow at a compound annual rate of 70 percent from this year to 2028. The projection comes as five fabs begin volume production of 2-nanometer chips this year — two in Hsinchu and three in Kaohsiung — TSMC senior vice president and deputy cochief operating officer Cliff Hou (侯永清) said at the company’s annual technology symposium in Silicon Valley, California, last week. Output in the first year of 2-nanometer production, which began in the fourth quarter of last year, is expected to
Taiwan’s drone exports surged past US$100 million in the first quarter, exceeding last year’s full-year total, with the Czech Republic emerging as the largest buyer, the Ministry of Economic Affairs said. Exports of complete drones reached US$115.85 million in the period, about 1.2 times the total recorded for all of last year, the ministry said in a report. Exports to the Czech Republic accounted for about US$100 million, far outpacing other markets. Poland, last year’s top destination, recorded about US$11.75 million in the first quarter. Taiwan’s drone exports have expanded rapidly in the past few years, with last year’s total
RSS