South African gold output falls hard

Allan Seccombe | Wed, 02 Jun 2010 11:27

[miningmx.com] -- IN an all too familiar announcement in recent years, the South African Chamber of Mines reported the country's first quarter gold production fell 15% quarter-on-quarter, extending the downward slide in output.

South Africa has fallen quickly from the top of the perch as the world's largest gold producer. It is now behind China, the United States and Australia. Its mines are becoming deeper and more expensive to mine and grades, which is the measurement of the amount of gold in each tonne of ore hauled to the surface for treatment, is dropping.

The latest gold output data shows no signs of arresting the fall in production.

South Africa produced 43,927.8kg of gold in the first three months of 2010, which is 15% less than the December quarter and 12.4% down on the same period a year ago.

"Gold mining companies lost an average of about 18 days of production during the quarter as the impact of the latter part of the Christmas holidays affected production," the chamber said in a statement.

The first quarter of the year is traditionally a weak quarter because of the slow start up after the year-end holidays.

South African gold miners also have to contend with safety-related stoppages of shafts when there are fatal accidents underground. Gold companies are on concerted drives to improve safety to minimise these shut downs.

Gold Fields CEO Nick Holland told Miningmx in an interview this was a critical year for the South African gold sector. Productivity has to be improved to avoid the closure of marginal shafts and job losses. Companies are grappling with steeply rising input costs, particularly on electricity, which is a big expense on mines.

Gold Fields wants to introduce a six-day working week, with every second Saturday being a compulsory working shift.

Harmony has shut down seven shafts because the ore bodies have run out or they're just not making money.

AngloGold Ashanti is practically putting its South African mines into intensive care in a process designed to cut costs and boost productivity to ensure they cope with escalating costs.