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  • Reflections on South Africa’s gold mining crisis: challenges for restructuring
  • Martin Nicol (bio) and Jean Leger (bio)

The Time

The article for Transformation 20 (1992) was drawn from a paper written for the Cosatu Economic Trends Group (Leger and Nicol 1991a). The ET Group, which had met with the ANC in Harare in 1990, was involved in plotting a pro-labour growth path for post-apartheid South Africa. The ET Group was the pre-cursor for the Cosatu Industrial Strategy Project, parts of the RDP and also GEAR. The paper was also a contribution to the Summit on the Future of the Mining Industry, ‘an unprecedented gathering of trade unions, mineowners and the SA government on 3 June 1991’ (Leger and Nicol 1991b:5).

It is distressing to look back at how events unfolded. So much of what we argued came to pass – relentlessly so, resulting in the loss of two thirds of South Africa’s gold mining industry. The industry appears set to continue on a path of decline, despite the great rises in the gold price of recent years. Urgent and profound changes are required to the economic framework if what remains of the industry is not to be completely dissipated, with the consequent loss of jobs and economic value of the industry to the country.

  • • The question in 1990: What could be done to ensure the survival of gold mining as a generator of wealth, export revenue and a provider of employment, given a stagnant gold price, a 15.5 per cent inflation rate and ingrained employment inequities?

  • • The question in 2011: Can we safe-guard the 160,000 jobs we still have in gold mining, given the notable increase in the real gold price since 2005? Can South Africa make it attractive for capital to invest in new gold mines?

In the original paper we argued that unless urgent steps were taken, a dramatic downscaling of the industry was imminent. Fortunately we were [End Page 173] incorrect on the time frame – the decline has played out over 20 years rather than five years.

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Figure 1.

SA employment on gold mines

  1. 1. In the paper we argued that mine workers would be worst hit, that employment would fall from some 450,000 jobs to about 130,000. As can be seen from the accompanying graph, by 2000 employment was down to 200,000 and is currently around 160,000.

  2. 2. We wrote that gold production would decline from 600 tons per year to less than 200 tons per year.

In 2010, gold production was down to below 200 tons. More concerning is that despite the substantial real increase in the price of gold in recent years, the decline in gold production has continued, and is likely to continue, unless substantive new capital investment in new mines is attracted. Great reserves of gold remain. South African deep level gold reserves remain the world’s richest, and hundreds of years of mining could be sustained if the returns were sufficiently attractive.

Accompanying this decline in gold production has been the decline in manufacturing and engineering activities that were directly related to the gold mining industry. These are not easily quantified and largely hidden. But the consequence has been the loss of major sectors of South Africa’s previous substantive heavy engineering and manufacturing capacity. [End Page 174]

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Figure 2.

SA gold tonnage per year : South Africa’s share of world gold production has fallen drastically. World gold production has boomed but SA production has fallen – despite our huge gold reserves. This is a profound indicator of the decline of our gold mining sector.


A radical fall in gold mine employment and in gold exports

Gold 1990 1991 2008 2010
% of total SA exports 31% 7% 10% est.
Real Export value (2008 R '000s) 72,830,189 45,789,471 51,158,506 est.
Real Export value (1990 R '000s) 19,300,000 12,134,210 13,557,004 est.
No. of gold miners 481,178 166,333 159,745 q1

Inflation eventually came down (2008 an exception!)

Annual inflation rate 14.2% 15...


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pp. 173-184
Launched on MUSE
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