AMN - South Africa needs to unlock potential near surface - comment by Yolanda Torrisi

Mining is a pivotal and integral industry in South Africa which touches on all aspects of the wider economy. The mining industry in South Africa employs 500,000 people from across the entire African continent.

Mining exports of precious metals and gems total some US$14.6 billion with China importing just on half of what South Africa produces, followed by Germany and Japan. A further $10 billion is earned from mining iron ore, manganese and vanadium.

Since gold was discovered in the 1860s, South Africa has produced more than 2 billion ounces of gold, which is about half of all the gold reserves today.

It is believed that South Africa has another 2 billion ounces in reserves but the challenge is to be able to mine safely at depth. South Africa has 8 of the 10 deepest mines in the world.

Mponeng is the deepest mine in South Africa, extending to a depth of 4km. It is believed it has more tunnels than the New York subway. And the depth does not stop there as plans are under way to extend it to 5km underground. Deposits of 140 tonnes have been discovered.

With greater depth comes higher risks and costlier operations. Mining consultancy group Minxcon Group has advised that South African gold mines are the highest total cash cost mines in the world and operating at 37 per cent above the average global total cash costs.

Labour is another costly mine requirement. Some South African mines have a labour force in excess of 30,000 and the average price to produce gold in South Africa is $1000 for each recovered ounce. Meanwhile other gold producing nations such as Australia, Canada and China are producing gold for $680 per recovered ounce.

Many investors are seeing the high costs of investing in South Africa and are heading north.

Countries such as Ghana, Guinea, Mali and Tanzania are showing to be prospective. There are more than 20 African countries which produce more than 20 tonnes of gold annually.

South Africa faces many challenges and its neighbours are grabbing a piece of what has been steadfastly, South African cake.

Yolanda Torrisi is Chairperson of The African Mining Network and comments on African mining issues and the growing global interest in the African continent. Contact:yolanda@yolandatorrisi.com