Online Reporter
South Africa is set to open its first new underground gold mine in 15 years — an increasingly rare event for a country that was once the world’s largest producer of the precious metal.
West Wits Mining plans to start production next year at Qala Shallows on the western fringe of Johannesburg, a city founded during the gold rush that followed the discovery of the Witwatersrand reef in the 1880s. The Australia-listed company will mine ore during the three-year construction period to take advantage of sky-high bullion prices.
“We are really the only formal company trying to start a new mine” in South Africa’s gold industry, chief executive officer Rudi Deysel said in an interview.
The US$90 million investment by West Wits will yield a mine with a modest annual output of 70 000 ounces, but it’s a bright spot for the nation’s dwindling gold sector.
After topping the global rankings for decades, South African production has slumped by more than 70 percent over the past 20 years as its deep, high-cost mines struggle to compete with other producing countries.
“The demise of South Africa’s gold industry is usually told as a kind of morality tale about bad domestic politics, but the crucial development was the worldwide expansion stimulated by soaring gold prices in the 1970s and 1980s,” said Duncan Money, a mining historian who studies the sector. This provided the option to mine gold elsewhere “without the enormous and expensive technical challenges,” he said.
South Africa’s gold industry now employs just under 90 000 people, less than a fifth of the number that used to power the apartheid economy during the 1980s.
That contraction has come as higher wages and electricity prices combined with the difficulty of running the world’s deepest mines. The economic and social impact on the nation is magnified as every gold miner supports between five and 10 dependants, while creating two jobs elsewhere. — Bloomberg
