Gold industry enters final phase of slow death
The future is looking bleak for gold mines, with nothing to stop the inevitable decline of the once-mighty industry
Back in 1987, President Cyril Ramaphosa — then a 34-year-old labour union leader — led 300,000 black miners in a strike that symbolised resistance to the apartheid regime. Now, striking gold workers face a less politically charged battle, but one they cannot win.
The 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 gold mines are unprofitable at current prices.
Dwindling output has cut gold’s contribution to little more than 1% of the economy, down from 3.8% in 1993 — the year before democracy. While the industry’s demise won’t reverberate in the way it once would have, the mines minister has criticised Gold Fields’ plan to cut jobs as the ANC seeks to shore up its base before elections next year.
Mines run by Gold Fields and Sibanye Gold have been halted by strikes over job cuts and wages respectively. Both producers cut their output projections for this year.
The gold industry now employs just over 100,000 people, less than a fifth of the number that used to power the apartheid economy. The economic and social impact of a further contraction in the industry will be magnified as every gold miner supports between five and 10 dependents, while creating two jobs elsewhere, according to the country’s minerals council.
Higher wages and power prices, combined with the geological challenges of the world’s deepest mines, will mean more job losses and less production over the next five years, said Gold Fields CEO Nick Holland.
“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. CEO Neal Froneman acknowledges 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 gold mines can survive a little longer.
“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,” he said in an interview last month. “There is still money to be made.’’