-Caveat Lector-
South Africa is the world's biggest gold producer
Low Gold Prices Worry South Africa
By DANIEL J. WAKIN
.c The Associated Press
JOHANNESBURG, South Africa (AP) - Like a recurrent bout of malaria, gold
price jitters are again sweeping South Africa.
This time, worries about a pillar of South Africa's economy are coming just
when a new government is promising faster solutions for joblessness and
poverty to a black majority already five years into the post-apartheid era.
Analysts, gold mining industry officials and trade union leaders this week
warned that low gold prices could bring on more layoffs as the cost of
producing an ounce of gold exceeds its value.
The industry employs 250,000 people, and gold accounts for a fifth of export
earnings. South Africa is the world's biggest gold producer.
``In the last two years 100,000 gold mining jobs have been lost in South
Africa alone,'' said Roger Baxter, an economist at the Chamber of Mines.
``It's a scary situation.''
Gold is hovering just above $258 an ounce, tumbling from around $300 at the
beginning of the year.
The latest worries come nearly 20 years after gold hit its peak of $875 in
January 1980. The long decline in prices has prompted a shrinking in the
industry. In the 1980s, the industry employed more than twice as many people
as now, and accounted for nearly half of foreign exports.
If prices stay at current levels for another month, 80,000 miners in
unprofitable South African shafts could lose their jobs, according to the
Chamber of Mines.
``They are sitting on a knife edge,'' Baxter said.
The consequences won't be confined to South Africa.
For generations, rural villages from Mozambique to Malawi have sent their
young men to South Africa's mines. Some analysts say as many as 10 extended
family members survive on one miner's salary, which averages $430 a month.
Leaders of the world's main industrial nations meeting in Cologne, German
last week gave the go ahead for the International Monetary Fund to sell 10
percent of its gold reserves to help finance debt relief for the world's
poorest countries.
That decision, announcements by central banks that they will sell or are
considering the sale of gold reserves and the actions of gold speculators
have pushed gold prices down to a series of 20-year lows.
The crisis has created unusual alliances. Bobby Godsell, chief executive of
mining giant AngloGold, and James Motlatsi, president of the National Union
of Mineworkers, traveled to Washington this week to lobby Congress to oppose
the IMF gold sales.
The industry argues that gold plays a major economic role in a quarter of the
very countries the IMF sale is aimed at helping. A price drop will erase any
gains from debt relief, mining interests say.
South Africa's unemployment rate already stands at 42 percent for blacks.
Only a growing economy can generate significant numbers of jobs. And growth
here has always depended on foreign exchange from gold sales, said Warren
Krafchik, an economist for the Institute for Democracy in South Africa.
If gold prices collapse further, President Thabo Mbeki, who was inaugurated
this month, will lose one of his economic ``lifelines,'' Krafchik said.
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