Commodity Blog

Total South African gold production fell by 13.6% to 220,127 kg in 2008, the lowest level of production since the 218,031 kg produced in 1922, the country’s Chamber of Mines said Tuesday.
The 13.6% decline was also the largest single drop in gold production since the strike-induced 13.8% decline in 1922, the CoM noted.
“Key reasons for the year-on-year decline in gold production include the impact of the electricity supply curtailment in early 2008, which forced downsizing in the gold mining industry and the significant impact of safety-related closures,” the CoM said in a statement. “The mining of lower average grades facilitated by higher prices also contributed to the decline in production.”
The closure of the gold mining sector from January 24–31, 2008, was the first time that the South African gold mining sector had been closed since the Anglo-Boer war between 1900 and 1902, the CoM noted.
While South Africa had slipped to world production position 2 behind China in 2007 the country’s rank declined a further position to third in 2008 after China and the US, it added.
In the fourth quarter of 2008, South Africa’s total gold production decreased by 0.9% to 55,242 kg when compared with the third quarter of 2008; on a year-on-year basis, gold production was down by 10.7% in the fourth quarter.
For gold mines members of the Chamber, production decreased by 16.8% to 182,490 kg in 2008. The 4.2% decline in tons milled to 51 million mt combined with the 13.1% decline in the average grade contributed to the overall decline, the CoM said.
But despite the decline in production, South Africa’s gold mining sector “remains a crucial part of the economy,” the CoM stressed. In 2008, the industry employed 166,000 people (average first three quarters), paid about Rand 15.5 billion ($1.55 billion) in salaries and wages, spent about Rand 14 billion on procuring goods and services in the local economy, accounted for about 2.5% of GDP (directly, indirectly and induced), spent about Rand 9 billion on capex, paid about Rand 4 billion in taxes, and earned about 7% of the country? s merchandise exports (or about Rand 48 billion), the CoM said.