The crisis in South African gold mining

Abstract

Rising costs, falling ore grades and a stagnant gold price are steadily eroding the economic viability of gold mining in South Africa. This paper explores the major economic dynamics behind the profit squeeze. The empirical analysis highlights the negative effect of the low gold prices—a development which more than drowned out the positive impact of increased labor productivity. Attention is also paid to the hemorraging of labor from the industry as well as to recent profit-sharing agreements with the National Union of Mineworkers. The paper concludes by arguing that world goal market conditions are not conducive to any sustained gold price increase in the near future.