Newspaper article The Christian Science Monitor

Falling Prices Land Hard on S. African Gold Miners in Recent Weeks Prices of the Precious Metal Have Dropped to a 12-Year-Low, Shaking the Stock Market and Laying off Thousands

Newspaper article The Christian Science Monitor

Falling Prices Land Hard on S. African Gold Miners in Recent Weeks Prices of the Precious Metal Have Dropped to a 12-Year-Low, Shaking the Stock Market and Laying off Thousands

Article excerpt

Harry Motlaanme grips a piece of paper spelling out the end of his 20 years as a gold miner, a victim of the vagaries of a glinting piece of metal.

The union office at the Randfontein Estates Gold Mine is streaming with hundreds of bewildered miners like Mr. Motlaanme, who after years in one of the world's most dangerous jobs is left with a family to support and unlikely prospects for another job.

With a mere 15,000 rand ($3,100) as a layoff payment, Motlaanme is still in shock.

"What can I do? I'll join the end of the unemployment queue for jobs which don't exist," he says.

Motlaanme is the human face of the recent fall in global gold prices, which have jolted South Africa, the world's biggest gold producer and Africa's strongest economy.

Since June 30, the price has slipped to a 12-year low of $320 an ounce - a critical point in terms of profits.

"At these levels we're looking at losing 55 percent of profitability and at least 50,000 jobs over the next six to 12 months. This has a major impact on the economy," says Leon Esterhuizen, a gold-mining analyst with stockbrokers Societe Generale Frankel Pollak in Johannesburg.

The recent drop in the price adds to a decade-long decline in South Africa's key industry, and is most inconvenient for the black-led government, which has failed to deliver on promises for jobs to alleviate the 45 percent unemployment rate.

The effects of the gold slump are dire for the poor black men who make up most of the mining work force, which has shriveled to 350,000 from 530,000 a decade ago.

Other gold-producing countries are suffering from the low prices, but perhaps none more so than South Africa, which holds 40 percent of the world's reserves.

Since gold was first discovered there in 1886, 47,000 tons have been mined, or half its reserves. But the other half is costly to extract, encased in hard rock in some of the deepest mines on Earth. Low gold prices make it less viable to dig out.

This is not good news for an economy that depends on gold for 20 percent of its exports. During the second quarter, gold mines expected to report combined losses of at least $22 million. …

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