Tuesday, April 12, 2005

South Africa's Gold Production Lowest in 73 Years

South Africa's gold production fell by 8.8 percent to 342.7 tons in 2004, the lowest since 1931. Roger Baxter the cheif economist at Chamber Mines said it was due to the strong South African Rand's impact on domestic gold prices and rising costs.

Ten gold mines which account for 90 000 jobs and half of the country's gold production, were making only marginal profits or outright losses, Mr Baxter said.

Harmony Gold plans has posted its sixth consecutive quarterly headline loss in the fourth quarter of last year and plans to cut 5000 jobs.

Other gold mining companies have also warned of job cuts due to the rand eroding export earnings. Gold Mining is one of the South Africa's biggest private sector employers.

Mr Baxter said costs were rising much faster than inflation, with total gold production costs, excluding capital expenditure, up 13.4 percent in 2004, compared with the 1.4 percent annual inflation increase.

Mr Baxter said that water prices rose by 18 percent a year over each of the past three years in South Africa.

Labour costs, which comprise about half of the total, also rose faster than inflation, while transport costs leaped in 2003 and 2004 Mr Baxter said.

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