By Laura Cornish.
This was revealed by Harmony Gold’s CFO Frank Abbott at a mining breakfast this morning hosted by the Joburg Indaba’s Bernard Swanepoel.
Although the theme of the breakfast was mining tax, a number of Abbott’s presentation slides revealed how the gold industry in South Africa has evolved over time.
The average gold grade has dropped significantly since the 1970s – from just below 14 g/t to just below 4 g/t in 2012 (source: Chamber of Mines). And the average number of employees is declining much faster than that, from around 169 000 in 2007 to about 131 500 in 2013.
The significant upside
It is not all bad news however, average wages paid, measured in billions per annum, has increased from R14.7 billion to R23.9 billion in the same period while the average annual earnings per worker on gold mines increased from R87 000 to R181 600 – also in the same period.
Generally speaking, in terms of total labour employment, the gold sector remains the largest employer as well (excluding aggregates), substantially compared to other commodities. See graph (right, below).
Is this sustainable?
Despite the positives, one overriding question remains, are these salaries and employment figures sustainable?
South African gold mines are reaching depths generally unheard of around the world – AngloGold Ashanti’s Mponeng mine tops the list extending more than 4 000 m below the surface. In fact, it is looking at methods to extract less waste to reduce costs of transporting ore above ground.
If the gold price however climbs as forecast over the next 15 years (click here to read more on this subject), then perhaps the next 8 – 10 years will deliver further lucrative results.
For now the industry is struggling to keep its head above water at current gold prices while managing safety challenges as depths become increasingly and ‘unnaturally’ deeper.
Nonetheless, gold mine workers still have healthy bank accounts, compared to years past.