Once again investors at the commodity and precious metals markets are focusing on production in South Africa. According to Statistics South Africa (Stats SA) in January, gold production dropped 11.3% in comparison with the previous year. During the 1970s, South Africa regularly produced over 1,000 tonnes a year, but this year production will reach just 220 tonnes. In the 1970s South African mines accounted for 80% of worldwide gold production, while today this figure stands at just 15%.
Likewise, recent data showed that during 2011, Australian gold production remained largely unchanged from 2010, with an increase of just two tonnes. Analysts had been expecting much improved production data. But while Australia has good prospects of boosting its gold production, South African mines are ageing – as can be seen by the great production declines in the Witwatersrand Basin. Here gold production reached its peak in 1970 at one million kilos, but has been steadily declining ever since. It’s expected that gold production in the Witwatersrand Basin will come to a complete standstill by 2050. Whereas in the past gold deposits were close to the surface and could be easily mined, today mining companies need to drill at ever-greater depths, thus greatly increasing production costs. Gold is often extracted at depths of up to 6,000 metres. Production of other metals in South Africa – including palladium and platinum – has however not declined as much as gold production.
But mining companies are increasingly hopeful that South American countries such as Peru, Chile and Paraguay can increase their production where other countries are faltering. The Peruvian Ministry for Energy and Mines reported that from January 2010 to February 2011 production increased from 429,298 to 485,987 troy ounces. Data for the silver sector were also good. In January Peruvian mining companies' silver production increased by 4.9%, but copper and zinc production dropped 4.8% and 15.75%, respectively.
