Gold production in South Africa could decline by up to 20% this year
Julian D.W. Phillips
Aug 30, 2005
Excerpts from the "Global Watch - The Gold Forecaster."
Restructuring at S.A.'s gold mines, together with a continuingly strong Rand forcing the prices received by the mines to loss levels for many mines and a one-day strike, hammered South African gold output down 18% in the June quarter against the same quarter last year, according to Chamber of Mines figures just released. In April the chamber reported that S.A.'s gold production fell 8.8% to 342.7 tonnes last year, the lowest level since 1931. Now take this figure, down 2.4% on the first quarter and to date the years 's gold production is dropping below the 400 tonne level, if the second half rises back to last year's levels. This is most unlikely.
What is more likely is that the fall off will continue to take annual production this year from South Africa to 360+ tonnes, a far more than projected drop, than expected. This is even more significant when one considers that a weakening Rand is moving off the screens to be replaced by a steady to stronger Rand. So there is little short to medium term prospect that gold production will improve. With the prospects of a "Royalty" still on the screen, it is more likely that these figures will continue to fall as the South African mining environment continues to discourage new investment in gold mining.
India - Gold situation Report
The Monsoon rains have calmed, pre-monsoon confidence in the economy has moved from scepticism to confidence. Gold imports are on the rise thanks to the slight price correction and the persistence of the current price levels.
The biggest problem in the Indian Gold market is the different levels of the Value Added Tax to be found in the different Provinces. In Jaipur and Ahmedabad gold is free of such a tax, so imports are flooding through there and spilling over into the Provinces like Chennai. So Chennai dealers are doing "precious little".
This is not a happy situation and one the government is looking at. In Delhi, the government is contemplating dropping the tax too, but keep delaying the decision, leaving markets like Chennai firmly in the hands of out of town dealers from Jaipur and Ahmedabad where they pay less tax. But in their hometowns the volumes are still lower than usual.
We watch and see if the market learns to accept these levels and returns to the market. What must be mentioned is that the overall volumes of Indian gold importing are rising annually. They will have a greater and greater impact on the gold market in the coming years.