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1Q 2008 South African Gold Production Falls 15.6%

Written By Luke Burgess

Posted June 3, 2008

south africa map

South African gold production fell by 15.6% to 52,228 kilograms during 1Q 2008 compared to 4Q 2007 due to the national electricity emergency which effectively closed the gold mining industry from January 25th to 31st.

Since that time South African mines have been forced to operate with only 90% of their normal electrical requirement as Eskom, the major South African electricity public utility, has been unable to meet power demand and has rationed power to avoid a collapse of the electricity network.

Eskom has warned the power crisis may last for years and blames its problems on several factors including the failure of the government to invest in electricity generating plants, maintenance problems at its power plants and low coal supplies.

On a year-on-year basis, the rate of decline in gold production was 16.8% in the first quarter of 2008. Overall mining output fell by 22.1% in the quarter—its lowest growth since the second quarter of 1967—largely due to the electricity shortages that forced mines to halt production.

South African gold producers has felt the pinch of lower production since the beginning of the year. AngloGold Ashanti Ltd. (NSYE: AU) has shed 30.8% while Gold Fields Ltd. (NYSE: GFI) has given back 27.7% since mid-January.

– luke