South Africa is set to open its first new underground gold mine in 15 years, an increasingly rare event for a country that was once the world’s largest producer of the precious metal.
West Wits Mining Ltd plans to start production next year at Qala Shallows on the western fringe of Johannesburg, a city founded during the gold rush that followed the discovery of the Witwatersrand reef in the 1880s. The Australia-listed company will mine ore during the three-year construction period to take advantage of sky-high bullion prices.
The US$90 million (RM380.2 million) investment by West Wits will yield a mine with a modest annual output of 70,000 ounces, but it’s a bright spot for the nation’s dwindling gold sector. After topping the global rankings for decades, South African production has slumped by more than 70% over the past 20 years as its deep, high-cost mines struggle to compete with other producing countries.
South Africa’s gold industry now employs just under 90,000 people, less than a fifth of the number that used to power the apartheid economy during the 1980s. That contraction has come as higher wages and electricity prices combined with the difficulty of running the world’s deepest mines. The economic and social impact on the nation is magnified as every gold miner supports between five and 10 dependents, while creating two jobs elsewhere.
Qala Shallows will have a maximum depth of 850 metres, far less than some South African mines that extract gold from more than 3km beneath the surface.
Gold One Group Ltd’s Modder East, which opened in 2009, and Burnstone, which operated briefly from 2010 and was subsequently bought by Sibanye Stillwater Ltd, were the last underground mines to enter production.
Qala Shallows — a previously untapped section of a concession that was closed in 2000 after operating for more than a century — is projected to generate US$2.7 billion over its 17-year life, with costs of less than US$1,300 an ounce, according to its feasibility study. Gold traded at about US$3,340 an ounce as of 9.27am in London on Thursday.
State-owned Industrial Development Corp and commercial bank Absa Group Ltd have agreed to lend West Wits about US$50 million to construct the mine. It will send ore to a nearby processing facility owned by Sibanye.
Source: Theedgemalaysia