South Africa Gold Mines

The value of gold and diamonds and is of course a result of its rareness and also of its interesting physical characteristics. Gold is a so-called precious metal, which means it does not rust at normal conditions. It is resistant against many acids and a good electric conductor, which makes it useful for electronic circuits. Gold is also useful for jewelry because it will not change colors and tarnish.

Gold is normally found in pure form. This means it is not oxidized and it is not necessary to process it very much. But the amounts of pure gold are typically very little as it is normally evenly distributed in the rock. There are several geologic processes, which accumulate gold; most important for classic gold fields is erosion. The rock is eroded; the gold remains, and the small pieces of gold are washed into the next stream. But gold is very heavy, and so it tends to deposit in holes on the ground of rivers, a deposit called placer.

Other deposits are polymetallic deposits, where hydrothermal processes, often in combination with sulfuric chemical reactions, deposited large amounts of different metals in submarine depressions or in clefts. Typically gold is the rarest metal in the ore, but depending on the percentage and the value, it may be the most valuable part. As it is rather easy to process those ores in furnaces and separate the different metals, those deposits are mine since the early Middle Ages. Gold is found all over the world. It is part

of any volcanic eruption, though in very small amounts. Depending on the geologic situation, the mining is very different. Modern techniques and the massive use of machinery allow the processing of low grade ores with only very small amounts of gold, some Grams per ton. The most important gold producer of the World is South Africa.

The first South African gold rush followed the first diamond strikes by only a few years. Mining started in earnest in 1887, and the new township of Johannesburg began to fill with settlers. The first results were astonishing, and by the end of the year it was clear that the Rand mines were fabulously rich. Many of the Kimberley diamond millionaires moved to new headquarters in Johannesburg, which quickly became the largest city in southern Africa, a position it still holds.

Gold has long been the basis for South Africa's relative prosperity. At least half a million South Africans, including dependents and suppliers, rely on the industry. From ancient times to 1989, the South African mines produced more than 40% of all the gold that had ever been mined. In 1970 South African gold production was 1000 tons, then more than 70% of the output of the non-Communist world. South Africa is still the world's largest producer, by far. It has the worlds deepest mine, 3585 m below surface at

the East Rand mine. The Free gold mine, owned by Anglo American, was until recently the world's most productive gold mine at 115 tons a year; and Driefontein Consolidated has produced more than any other gold mine, at 2292 tons.

However, the logistics of gold mining on the Rand are frightening. At a depth of 3000 m, rocks are at 50Ð'o C, and huge quantities of water have to be pumped out of the workings every day. This is high-cost gold-mining. New refrigeration systems have to be designed to make working conditions possible at depths like this. In the Harmony mine, one of the largest ice making machines in the world (over 3 million times the capacity of a domestic refrigerator) makes 20,000 tons of ice a day, which is crushed and pumped along pipes that run down through the mine galleries: the warm water is pumped back to surface afterwards.

The unknown factor in South Africa is the future of labor costs. The mines employ several hundred thousand miners underground: half the production costs are for wages. Most of the gold miners are members of the black National Union of Mineworkers, which is pressing hard both for political and social reform and for better wages and working conditions for its members. But the long-delayed beginnings of

political reform in South Africa in the late 1980s coincided with a slump in gold prices. The South African gold mines, many of them a century old, were by then the world's deepest, and were technically very difficult and financially very expensive to operate even in spite of the low wages paid to the miners. The quality of the ore was slowly dropping: the average gold ore now averages less than 5 grams of gold per ton.

From 1970 to 1990 South African gold production fell 40%. Technical problems and high costs can be attributed to the deep mines and labor-intensive methods. There have been steady wage increases with no increases in productivityÐ'‹15% in 1989, for example. There is competition from low-cost surface mines. At the same time ore grades have dropped from 13 g/t to 5 g/t, while the world price of gold dropped. In 1990, 23 mines were producing gold at more than the selling price of $373/oz, and half of the country's 36 largest mines had applied for emergency government subsidies. Some mines had costs as low as $171 an ounce, but others (like East Rand Proprietary) had costs of $442/oz.The average cost for South African mines was about $275/oz, compared with about $250/oz in Australia and $210/oz in the US.

Winnie Mandela is on record as saying to black miners, "You hold the golden key

to our liberation. The moment you stop digging gold and diamonds, that is the moment you will be free." She could not be more wrong. If the gold mines close, the economic disaster will be visited most on the poorer section of society, the blacks. The South African reforms were predicated absolutely on a stable and healthy economy. In 1999, the price of gold dropped to a low point around $250/oz. This was very bad news for South African gold companies, South African gold miners, and the South African government. Gold companies scrambled to reorganize and streamline their operations. By the time the price again reached $290 again in early 2000, the gold industry had changed dramatically, in South Africa and globally

In 1867 a pretty pebble found near the Orange River, in the wilds of South Africa, was identified as a 21-carat diamond. Placer diamonds were found between the Vaal and Orange Rivers later in the year, and in March 1869 an 83-carat diamond turned up. By the end of 1870 there was a diamond rush, and by the end of 1871 two well-defined areas were recognized as the source areas, or pipes, for the diamonds. Four pipes were discovered all together at the town of Kimberley. In 1872 the pipes were giant open quarries worked by 2500 miners and 10,000 hired laborers.

The Kimberley workings were 190 feet deep by 1875, and miners