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GOLD NEWS

South Africa's gold output continues to fall

South Africa is slipping further down the global gold production league which it dominated for most of the last Century as lower grades and deeper mines take their toll.

Posted: Monday , 14 Mar 2011

JOHANNESBURG (Reuters) - 

South Africa's gold production fell 6.4 percent in 2010, an industry body said on Monday, moving the country further away from its former status as the world's largest producer.

Gold output fell to 191,833.7 kilograms in 2010, the Chamber of Mines said in a quarterly statement.

"Our mines are getting deeper and deeper, we cannot compete with other countries like Russia which can produce gold at a lower cost than what we can," said Abri du Plessis, chief investment officer at Gryphon Asset Management.

"(The gold produced) is not always of a high grade compared to somewhere else and our labour costs are getting more and more expensive. From those three perspectives, it is a bleak future for our gold companies."

A drop in South Africa's output compares with a rise in the top two producers China and Australia, where 2010 production of the precious metal rose 8.6 percent and 17 percent, respectively, compared with the previous 12 months.

South Africa was the world's largest gold producer for most of the last century and up until 2006, but output has been hit by dwindling grades and stoppages of mines and shafts for safety-related reasons as companies mine ever deeper.

Some South African gold mines reach depths of around 4 km.

The main gold mining firms in South Africa include the world's No. 3 and Africa's top gold producer, AngloGold Ashanti, fourth-ranked Gold Fields and fifth-placed Harmony Gold Mining Co..

In the fourth quarter of 2010, South Africa's gold production fell by 1.6 percent to 49,676.8 kg compared to output in the third quarter. Year on year, gold production was down 3.9 percent in the fourth quarter.

Spot gold was bid at $1,425.90 an ounce at 1302 GMT against $1,417.70 late in New York on Friday. Bullion hit a record of $1,444.40 an ounce last week.

© Thomson Reuters 2011 All rights reserved

 

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