The challenge for the South African mining industry in 1990 was to restructure itself, not just to take account of what was happening in gold mining around the world where output was soaring, but to adapt to a fast-changing political landscape at home, while a declining gold price was only partly offset by the depreciation of the rand.

In 2001 South Africa was still the largest producer, with 393.7 tonnes (12.7 million oz), but that is down from 605 tonnes (19.5 million oz) in 1990 and over 1,000 tonnes (32.2 million oz) in 1970.

An area excavated in preparation for an underground
winder room to be used for a new shaft at Mponeng mine
(Credit: courtesy AngloGold)

Gold's role in the South African economy is much less. Until 1983, gold accounted for over 50% of foreign exchange earnings; today it is under 20%. The mines used to employ over 500,000 people, today it is scarcely 300,000. In 1990, there were 34 major gold mines, today there are less than 20 significant mines.

The great mining houses, which used to control many enterprises besides gold, have largely been 'unbundled', often spinning off their gold operations into new companies and familiar names have vanished.

Anglo American has put its gold companies into AngloGold, within which the South African mines have been concentrated as Vaal River, Free State and West Wits.

The original Gold Fields of South Africa's mines are part of a new group, also called Gold Fields, set up in 1998 in a merger with the gold mines of Gencor (itself formed by a merger in 1980 of General Mining and Union Corporation). Gold Fields includes Driefontein, Kloof, Beatrix and St Helena.

Johannesburg Consolidated Investments has been 'unbundled', with JCI Gold, created in 1998, only having a serious stake in Western Areas.

AngloVaal's gold operations are translated into Avgold, set up in 1998, whose only real gold asset is the new Target mine, where output commenced recently.

Rand Mines has become Randgold Resources, which has only two projects in Mali; Syama, whose operations are currently suspended, and a 40% stake in the new Morila mine. Its former Harmony mine is now independent and has rapidly been acquiring a new stable of mines in South Africa, Australia and Canada.

The grade, which was once an enviable 13g/t (0.42 oz) is at best 8-9g/t (0.26-0.29 oz) at Vaal River or Driefontein, but often 5-7g/t (0.16-0.22 oz) in Free State (excellent for open pits, but not for deep mines).

Average cash costs for South African mines in 2001 were US$196 per ounce, against $189 in the US and $175 in Australia (based on GFMS estimates of weighted average total cash costs for mines in these countries).

While restructuring at home, the South African houses have also ventured abroad. AngloGold is in Argentina, Brazil, Mali, Namibia, Tanzania and the United States. Gold Fields is at Tarkwa in Ghana as well as in Australia and Randgold is in Mali, while Harmony owns operations in Australia and in Canada.

For the first time, however, overseas companies have also bought into South Africa; Canada's Placer Dome has acquired 50% of Western Areas, an interesting vote of confidence in the future of the South African industry.