News Article : South Africa remains strong despite dwindling mining industry
|Category:|| Investing : Coins & Collectables|
|Author:||Edited by ITInews|
|Posted:||19 Nov 2014|
South Africa currently ranks as the fifth largest gold producer in the world
While this may sound like a great feat, those who do not know about the country’s past will be shocked to know that it used to be the number one gold producer in the world.
All the “easy gold” that can be easily extracted from secure parts of the world is almost depleted, and this fact has affected South Africa the most.
In the safest mines in the U.S., gold mining yields are below 78% as of 2002 levels.
In 1983, South Africa was able to produce a staggering yield of about 22 million ounces of gold that make up 64% of the world’s output.
Now, South Africa’s gold yields account for only 6% of the global production.
There are several reasons why South Africa’s yearly output declines apart from the “easy gold” issue. First, the lifespan of mines is getting shorter.
Secondly, apart from Anglogold Ashanti’s Reef Boring technology, no company has discovered a new way of prolonging the lives of mines by extracting more ores from already-mined sites.
Thirdly, operational costs get more expensive every year since mining and discovery efforts rely heavily on oil.
Fourth, gold prices are very low right now and that affects gold mining companies with operational costs that exceed $1000 per ounce of mined gold. As of this writing, gold prices are as low as $1,194.22 per ounce.
Two years ago, gold’s spot price peaked in July at $1,883 per ounce.
Despite its low production of gold, however, South Africa’s economy and minted gold coins remain strong investments.
The South African economy grows 3.2% on average every year since 1994.
The South African Krugerrand, the country's minted gold coin, has been in circulation since 1967 and remains a popular coin among collectors since it is sold at a very low premium.
The Krugerrand has had a legal tender status since it was first minted, meaning that investors who have them can sell them for cash wherever they go.
It is estimated that about 50 million gold ounces have been minted as Krugerrand coins.