Abstract
M.Comm.
The South African gold mining industry has in the last decade increasingly come under
pressure. The radical drop in the dollar price of gold, the lowest it has been in 16 years,
has depressed revenues to the point where drastic action is needed. Furthermore, costs have been escalating. Where the South African Industry was the international leader in low cost production ten years ago, it has now become the most expensive. The following statement by the Chamber of Mines President, Bobby Godsell (1998: Godsell) , underlines the problem: "The gold mining industry world-wide is in a state of crisis, with the price of its product at a 16-year low. Few industries would not be in crisis if they were receiving 1982 prices for their product. In South Africa, two other features contribute to an even more acute crisis. Over the last decade South Africa has moved from being the lowest cost major gold producer to being the highest. Secondly, many South African gold companies are facing physical depletion of their ore reserves. Many companies have now been in operation for more than half a century. Eventually every mine must come to the end of its mineable reserves. Members of the Chamber are deeply committed to meeting the challenges of low prices, high costs and one depletion constructively and effectively. To this end the Chamber proposed a productivity-linked wage agreement last year. Since that agreement we have seen a further $30-drop in the gold price, with a third of Chamber
member gold mines making losses, aggregating about R12-million a week. The Chamber shares the National Union of Mineworkers' concerns about job losses. Retrenchments are the consequences of the industry's problems - not their causes. Without addressing the causes, a moratorium on retrenchments will, in our view,achieve nothing, and possibly create expectations which would not be fulfilled. There is only one way to reduce job losses and this is to find ways to return companies to profitability and to make them cost-competitive with producers of gold elsewhere in the world. Much as it understands the National Union of Mineworkers' anger, the industry will not find a way forward through marches, protests or strikes. The combined wisdom, and then the combined effort of management, labour and government will be required to find a way forward for the South African gold industry."