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An­gloGold Ashanti’s an­nounce­ment that it will close two mines and re­trench 8 500 work­ers is only the first of many large-scale job cuts that were pre­dicted in 2007.

A study done in 2006 and 2007 had pre­dicted that vir­tu­ally all of South Africa’s large gold mines would be shut by 2014. This turned out not to be true, mostly due to the un­pre­dicted de­pre­ci­a­tion of the rand, which pushed up the lo­cal gold price.

Now, one of the peo­ple in­volved in the study says An­gloGold’s an­nounced mine clo­sures are the be­gin­ning of the end.

The 2007 study, con­ducted by the Cham­ber of Mines through the Mon­i­tor Group, had ad­vo­cated a mas­sive change in how gold mines op­er­ate. Rec­om­men­da­tions in­cluded 24-hour min­ing days and the con­trol of wa­ter and power prices, de­spite these be­ing out­side the in­dus­try’s con­trol.

“Un­for­tu­nately, noth­ing came of it,” said Gavin Hart­ford, a labour so­ci­ol­o­gist who was at the time ap­pointed to try and get the mines and unions to agree on these plans.

“In­stead, the rand weak­ened and blew life into the mines past 2014.”

“We are now clearly at a point where the gold in­dus­try’s end has ar­rived. We have to ex­pect large-scale job cuts.”

The price of elec­tric­ity has risen by 300% over the past five years, he pointed out.

“When we did the study, power amounted to about 6%, on av­er­age, of a mine’s ex­pen­di­ture. Now it is 30%.”

Hart­ford says he re­cently saw num­bers from an­other ma­jor gold pro­ducer, which in­con­tro­vert­ibly show that its mines have no chance of sur­vival.

The 2007 study made ter­ri­fy­ing ob­ser­va­tions.

At the time the cost of min­ing a ton of ore was ris­ing by 11.7% per year and the ore pro­duc­tion per em­ployee was drop­ping by 2.9% per year.

If these trends had gone un­hin­dered, they would have led to the clo­sure of the gold in­dus­try in eight years, then mean­ing 2014. It was es­ti­mated that if the cost in­fla­tion in mines could be kept un­der 6% it would buy the in­dus­try an­other four years.

If the fall­ing pro­duc­tiv­ity could be stopped, then the mines would win eight more years.

Hart­ford and other sources in the min­ing in­dus­try said plat­inum mines were also very likely to start an­nounc­ing mass re­trench­ments.

“It is ac­tu­ally far worse at the plat­inum mines. It is un­be­liev­able that there have not been any large job cuts yet,” said one source.


BE­GIN­NING OF THE END pro­duc­tion decreases The en­tire min­ing sec­tor could be headed for clo­sure as min­ing costs rise and

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