Gold News

DRDGOLD facing gold mine closure over Eskom hikes

DRDGOLD revealed today (October 22nd) that underground operations at one of its South African mines may have to be cancelled over proposed Eskom price hikes.

The state power utility intends to increase electricity rates by about 45 percent in each of the next three years in order to fund the construction of new power stations.

However, Niel Pretorius, chief executive of the country's fourth-biggest gold producer, has admitted that the move will force the closure of the Blyvooruitzicht facility.

"Eskom's proposed increases will add R70,000 to the underground operating costs of producing a kilogram of gold at Blyvoor by the end of that three-year period," he told MiningMX.

"The underground mine will not cope with that because of the difficulties in saving that amount of cost elsewhere on the operation. We would have to shut it down."

If the closure does materialise, DRDGOLD's output of the yellow metal will inevitably suffer, although this news would be welcomed by anyone with a Gold Investment.

Lower supplies - particularly in a major gold-producing country such as South Africa - would lead to increased demand, which could then see Gold Prices move higher.

Meanwhile, last week's arrival of Dhanteras, the first day of the auspicious Diwali festival in India, heralded a surge in interest in gold from the nation's consumers.

Although they are renowned for their love of gold jewellery, Mehul Chokshi, group chairman of major jeweller Gitanjali, explained that investment demand is also booming.

"There was a huge rush for gold-linked investment, particularly gold coins, on Dhanteras and despite the surge in prices, the overall buying mood was bullish," he told Business Week.

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