Johannesburg, also called eGoli or the city of gold, has been the central gold mining district in South Africa for the past 130 years. Unfortunately, the gold industry in South Africa, including eGoli, is experiencing more and more problems. This spells bad news for those in the mining industry but also good news for those who want to sell gold.
The past 18 months have been a nerve wracking time in the South African mining industry as strikes and a decline in gold output have continued to hit the industry. It is almost wage negotiation season and the current offers on the table will inevitably lead to another spat between management and workers as the current offers on the table are too far removed from one another.
The National Union of Mineworkers (NUM) and the Association of Mineworkers and Construction Union (AMCU) are demanding a 60 per cent and 100 per cent increase respectively. The mines simply cannot afford increases that go into the double digits and the sad reality is that if the unions manage to get the increases they want, the mines will simply have to lay off a large amount of workers to make the mines profitable.
The mining industry is quite important to South Africa’s economy and it makes up about 60% of the country’s exports. It also accounts for about 6% of SA’s GDP and a strike, on average, leads to a loss of about R349 million per day.
Recently, strikes in the mining sector seem to be escalating into violence and destruction more easily with the most notable incident being the Lonmin Marikana Platinum Mine strike that quickly escalated to the point of violence and led to the death of 34 people.
The second crippling wave that is hitting the mining industry is the decrease in the production of gold which has decreased by 25% over the past 5 years. The average worker is producing less and less gold and this is making mining less profitable.
The good news for people selling gold is that if the decrease in gold production (and a steady demand for gold) continues, the price when selling gold will go up.
Liquid Finance is standing at the ready to give people selling gold the best possible price in a safe and secure selling environment.