The African Nation Built on Gold Loses Its Crown to a Rival

By Felix Njini, June 9, 2019, 1:00 PM GMT+3  

 

South Africa’s struggling gold industry has suffered yet another humiliation, losing its status as continent leader to Ghana.

The country that led global gold production for a century and extracted about half the bullion ever mined is now Africa’s second-largest gold producer. Output is shrinking as operators capitulate to stubbornly high costs, regular strikes and the geological challenges of tapping the world’s deepest mines.

Meanwhile, Ghana, a country whose gold mining industry dates back to the 19th century, is benefiting from lower-cost mines, friendlier policies and new development projects.

Golden Crown

Ghana's output has grown as South Africa shrinks

Source: The Ghana Chamber of Mines, Minerals Council South Africa

South African industry stalwarts AngloGold Ashanti Ltd. and Gold Fields Ltd. are shifting their focus to other countries -- including Ghana -- where deposits are cheaper and easier to mine. The largest remaining gold miner in South Africa, Sibanye Gold Ltd., is cutting thousands of jobs and diversifying into platinum group-metals as it struggles to contain costs.

The difficulties facing South African gold mines mean output is contracting even though it’s got the world’s second-largest reserves of the metal, according to estimates from the U.S. Geological Survey.

Golden Share

Australia and South Africa boast the largest reserves

Source: U.S. Geological Survey estimates

Note: Other countries reserves account for 12,000 metric tons

In Ghana, gold output jumped 12% in 2018, according to data from the Ghana Chamber of Mines. Small producers account for the largest share of the total, although Ghana also hosts some of the world’s biggest gold miners, including No. 1 producer Newmont Goldcorp Corp. Although Newmont is exploring in Ethiopia, Ghana is the only place in Africa where it operates.

“It’s an important part of our portfolio and, geologically we see really good potential to continue to expand,” Chief Executive Officer Gary Goldberg said in an interview. “We’re very happy operating in Ghana.”

The West African nation’s output will get a further boost when AngloGold Ashanti’s Obuasi operation, previously overrun by illegal miners, restarts later this year. Production from Obuasi is forecast at 350,000 to 450,000 ounces of gold annually during the first ten years.