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SA gold production declining 5% annually

[marketminer]

SA gold production declining 5% annually By: Tessa Kruger Posted: '09-OCT-06 10:00' GMT © Mineweb 1997-2006 JOHANNESBURG (Mineweb.com) --South African gold production fell from 430 tonnes in 2000 to 295 tonnes in 2005 as lower grades of ore are mined and reserves are seen to be being depleted, and the country is soon likely to be overtaken as the world’s largest producer of the yellow metal. Production will see an annual decrease of 5% over the next few years as new projects will not succeed in replacing continued falling production at existing mines, says Alex Conradie, chief economist of gold and platinum group metals at the Department of Minerals and Energy. The biggest recent drop in South African gold production took place from 2004 to 2005 when output fell by 12%. The majority of gold mines in South Africa are projected to cease producing gold over the next 10 to 20 years, while the ultra-deep South Deep mine on the West Rand of Johannesburg has the longest projected life span of 60 years. Lower gold production will have an impact on all the economic benefits that gold brings to the country, affecting sectors dependent on the gold mining industry and mining workers and their dependants. However, increased exports of platinum metals and coal could substitute income lost through lower gold production, says Conradie. Gold exports are expected to earn the country some R29.7 billion (US$3.6 billion) in 2006, a rise of R5.5 billion on last year’s revenue from gold, due to the increase in price and the weaker rand against the US dollar. Based on the department’s estimated prices of $600 an ounce in 2006 and $680 in 2007, gold would earn South Africa R34.5 billion in 2007 and R36.7 billion in 2008. But gold production in South Africa may eventually dwindle away, as most significant unworked reserves are located too deep to be mined economically at current estimated prices. “The gold price would not only have to increase, but the price and exchange rate will have to remain stable for a few months to a year, before decisions on projects of this nature could be taken,” Conradie says.