Gold News

Further SA output drop could lead to more investing in gold

A major mining body in South Africa revealed today (September 4th) that gold production in the country fell by 10.4 per cent during the second quarter of 2008.

South Africa is the world's biggest gold supplier but production at its mines has been hit hard by the Eskom power crisis, which occurred in January.

The situation was brought about by a major fuel shortage caused by poor government planning and has seen mines operating at just 90 per cent of their normal power levels since February.

Now a statement from the Chamber of Mines, which represents leading miners, has confirmed the seemingly ongoing effects of the problem, saying that "the key reason was the national electricity emergency".

However, the news will be welcomed by investors looking into buying gold, as such continued slumps in production will undoubtedly push gold prices higher.

Indeed, the Chamber hinted that the situation may be far from over, suggesting that the gold mining industry is still bearing much of the power shortage burden.

The statement desperately urged other electricity users to cut their consumption "given the significant export earnings and employment intensity of mining".

It has also been confirmed that gold production by members of the Chamber fell at a higher rate - 12.9 per cent - during the second quarter.

That figure came after records showed a significant increase in the use of surface, low grade dumps which resulted in a drop of 14.3 per cent in average grade recovered.

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