Gold – likely to
rebound from 2011
 
Cape Town, South Africa — MININGREVIEW.COM — 09 June 2009 – The South African gold mining industry – which has been in decline for a number of years – will continue declining up to 2010, but will rebound from 2011 as the electricity supply situation and skills availability improves.

New analysis from Frost & Sullivan – an international growth partnership company and leader in providing disciplined research and functional best practices – has found that the South African gold mining industry produced an estimated output of 220 metric tonnes of gold in 2008. It added that output levels were projected to decline, before recovering in 2011.

“Despite facing a host of challenges, South Africa’s gold mining sector has maintained its position in the global gold mining industry,” notes Frost and Sullivan metals and mining analyst Wonder Nyanjowa. South Africa is the world’s third largest gold producer after China and the United States of America.

“The rising price of gold in international markets, state-of-the-art processing and refining plants, and the transformation of the South African gold mining industry will continue to be key drivers of growth,” he added. “The remaining deep-level gold deposits in the Witwatersrand gold basin of South Africa will continue to attract the attention of explorers and investors, given strong metal prices and the technological breakthroughs that are minimising operating costs.”

Nyanjowa pointed out, however, that the deep-level mining necessary in the country exacerbated safety risks and used more electricity and diesel for the transportation of personnel and ore bodies to the surface. The net effect was that deep-level mines were more costly and uncompetitive to operate.
 
“The South African government’s renewed focus on mine safety, declining ore grades, electricity shortages, skills shortages, increased operating cost pressures and a difficult labour environment will result in further production cuts,” cautioned Nyanjowa. “Mining companies are likely to be concerned with sustaining current operations rather than opening up new mines.”

He went on to say that South African gold mining companies should focus on improving operating efficiencies, cutting hedge books and containing costs at every level of their operations. Use of the latest technological breakthroughs in South Africa’s deep level mines would help contain costs.