Mines go for broke as gold prices plummet

2013-06-30 14:01

Multimedia   ·   User Galleries   ·   News in Pictures Send us your pictures  ·  Send us your stories

With the rand gold price tumbling and wage talks on the horizon, mining firms face a severe crisis

The gold price kept tumbling this week, casting an increasingly dark shadow over the industry’s imminent wage talks.

Based on their most recent financial reports, the top three local gold miners – AngloGold Ashanti, Sibanye Gold and Harmony Gold – are all facing a severe crisis at current gold prices.

The rand gold price fell from R440?000 per kilogram last week to a low of R377?000 per kilogram on Thursday evening – well beneath the average all-in mining costs of Harmony and approaching the breakeven level of Sibanye.

The gold mines negotiating through the Chamber of Mines did finally announce the timeline for negotiations this week after receiving the demands of Association of Mining and Construction Union (Amcu).

First, they will meet unions on July?8 for a “prenegotiation workshop” to determine the protocol for the first negotiations since democracy where the National Union of Mineworkers (NUM) will be sharing its mandate to negotiate for the lower job categories covering the majority of the industry’s 138?276 workers.

The real negotiations will start on July 11, the Chamber of Mines said in a statement.

Amcu’s demand sheet echoes that of the NUM in many respects. Both unions in effect demand that the total cost to company of so-called category four workers jump from just over R10?000 a month to about R26?000 a month.

These workers represent 50% of the workforce.

The World Gold Council, a body representing gold mining companies internationally, chose this week to release a new global standard for reporting mines’ “all-in sustaining” costs.

The measure aims to demonstrate that gold mines are not, in fact, making money and follows on Gold Fields’ recent practice of reporting the “notional cash expenditure” it makes for every ounce of gold it produces.

Local gold mines have been adopting variants of this standard in order to counter claims that they are hoarding millions in profits instead of tending to workers’ and communities’ demands on them.

The main difference between normal and “all-in” costs is the inclusion of capital expenditure, which eats up a large proportion of a deep-level mine’s cash – mostly simply to maintain production levels.

Nick Holland, chief executive of Gold Fields and the populariser of the more expansive cost reporting, this week said that the gold industry requires a gold price of $1?500 per ounce to sustain itself.

On Friday, the yellow metal was trading at about $1?200.

In the platinum sector, Aquarius Platinum this week announced the first wage deal of the year – a surprisingly normal raise of “slightly above” inflation.

The company’s Kroondal mine, near Rustenburg in North West, is one of the few in the platinum sector where the NUM has not been displaced by new union Amcu.

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24


5 scientific benefits of owning a cat

According to science, just the act of watching cats itself can bring about positive emotions – so it comes as no surprise then, that owning a cat has a number of benefits.



Why we love cats
8 great natural remedies for your pet
How to clean your dog’s eyes
This special pooch inspired his brother to learn to stand again
Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.