WEST Wits Mining will break a significant drought when production begins next year at Qala Shallows, marking South Africa’s first new underground gold operation since 2009.
The Australian-listed company’s $90m venture represents a rare bright spot for South Africa whose mining industry has contracted dramatically from its former global dominance.
Located on Johannesburg’s western outskirts, where the city emerged during the 1880s Witwatersrand gold rush, the mine will produce a modest 70,000 ounces annually. CEO Rudi Deysel told Bloomberg News last week his company as “really the only formal company trying to start a new mine” in the country’s struggling gold sector.
South Africa’s production has plummeted over 70% during the past two decades, transforming the former world leader into a shadow of its apartheid-era strength. The industry now supports fewer than 90,000 workers, down from several hundred thousand in the 1980s when gold powered the economy.
Mining historian Duncan Money attributes the decline not primarily to domestic politics but to global expansion triggered by soaring prices decades ago, enabling extraction elsewhere “without the enormous and expensive technical challenges” of South African operations.
Qala Shallows will reach 850 metres depth, considerably shallower than some domestic mines extending over three kilometres underground. The site, part of a concession shuttered in 2000 after century-long operations, benefits from record gold prices that have surged 27% this year.
With production costs below $1,300 per ounce and gold trading around $3,340, the 17-year project anticipates generating $2.7bn.
State-owned Industrial Development Corporation and Absa Bank are providing approximately $50m financing, whilst Sibanye-Stillwater will handle processing, eliminating plant construction needs.
