South African Gold Output at 84-year Low
Gold production in South Africa totaled
275,119 kg in 2006, down 7.5% from
2005 and the lowest national total since
a strike in 1922 reduced production to
218,031 kg, the Chamber of Mines of
South Africa reported. For Chamber
member producing companies, production
fell by 7.9% to 235,042 kg, a 1.5%
increase in tons milled did not compensate
for a 9.3% decline in average grade
mined. During the fourth quarter of
2006, gold production in South Africa
was down 10% from the fourth quarter of
2005, as a 4.9% increase in tons milled
was insufficient to compensate for a
14.2% decline in average grade mined.
The decline in average gold grades
mined in South Africa during 2006 was
encouraged by a 41.7% increase in the
gold price to an average of R143,929/kg,
allowing companies to mine previously
uneconomic lower-grade ores. However, a
year-on-year increase in cash production
costs of 16.3% eroded some of the grade
flexibility provided by higher gold prices.
Total production costs for South African
gold before capital expenditures during
2006 rose by 11.9% to R99,725/kg. Total
production costs including capital expenditure
rose by 20.8% to R125,030/kg.