Fate of South African Gold Rests on Giant, Loss-Making Mine – by Will Kennedy and Felix Njini (Bloomberg News – July 30, 2018)

https://www.bloomberg.com/

Three thousand meters below the plains southwest of Johannesburg, teams of miners are toiling to revive the gold industry that underpinned South Africa’s economy for generations.

The South Deep mine was built to target the world’s second-biggest known body of gold-bearing ore, a deposit that could produce for the next 70 years and slow the steady decline in the country’s production. Trouble is, the mine’s not making any money for owner Gold Fields Ltd.

Grappling with the cost and technical challenges of working so far underground, Gold Fields has consistently missed production targets. All told, the company has spent about 30 billion rand ($2.3 billion) on the mine.

Chief Executive Officer Nick Holland remains confident the mine can succeed. “In South Deep, we have probably one of two remaining world large ore bodies in the gold industry that are actually discovered and delineated,” Holland, 59, said in an interview at Bloomberg’s Johannesburg office. “We can be around here for a long time. We do have a vested interest to make this work.”

For decades, South Africa’s mining industry was able to rely on an army of cheap labor and productivity has lagged behind other parts of the world. Ore is often still extracted by individual miners wielding hand-held drills.

For the rest of this article: https://www.bloomberg.com/news/articles/2018-07-29/fate-of-south-african-gold-rests-on-one-giant-loss-making-mine

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