SA gold rises from the pit.

Author:Ross, Priscilla
Position:1996 South African gold production - Industry Overview

Although South Africa's gold production fell to its lowest level in 40 years in 1996, PRISCILLA ROSS sees no cause for concern. Output has begun to rise and despite several fundamental problems, South Africa is still outperforming other gold producers.

Although last year saw South Africa's gold mining production fall to its lowest level in 40 years, the rate of decline has slowed right down and the country remains the preeminent producer of this precious yellow metal. Whereas in 1995, production fell by 10.5% (61.5 tonnes) to 523 tonnes, in 1996, at 5.3%, it was halved and total production stood at 494 tonnes. Put in perspective, South Africa compares well to its nearest rival, the US, which has an annual production of around 315 to 320 tonnes a year. Trailing in third place is Canada, with between 150 to 170 tonnes of gold produced a year. That South Africa boasts only 45 gold-producing mines, compared to about 82 in the US and around 64 in Canada, makes its production rate even more impressive.

This year should see South Africa turn its back completely on the recent nadir in gold mining production: innovative action by its major mining houses will undoubtedly spell a new lease of life for the gold mining industry. Companies are taking stock of their minerals rights and swapping them. Not only should production become more promising but shareholders will also get better value from their investments. For example, Anglo American and Gencor recently announced that, as a result of a grand-scale mineral rights swap, an additional 230 tonnes of gold will be made obtainable.

Lowest production cost

Existing gold mining operations at Gencor's Beatrix, Oryx and Evander mines and Anglo American's Vaal Reefs will be extended by accessing the adjoining ground. Among the potential benefits for Gencor, is about 2m resource ounces at Beatrix, a mine with the lowest production costs in the entire South African gold mining industry. The contiguity of the area to Beatrix and Oryx could see an additional 1.7m resource ounces fall into the clutches of Evander. Summing up the new climate, Mr Tom Dale, Managing Director of Gengold, says that industry leaders "are actively pursuing commercially logical mineral rights exchange".

Mr Bobby Godsell, CEO of Anglo-gold, states that it is incumbent on the South African mining industry to effectively turn all of the country's resources to account. "The historical allocation of mineral rights lease areas according to farm...

To continue reading