• 2 days How To Invest In The Cybersecurity Boom
  • 4 days Investors Are Patient With Unprofitable Giants
  • 6 days Wells Fargo Back In The Scandal Spotlight Once Again
  • 8 days 5 Stocks To Keep A Close Eye On This Year
  • 9 days As Auto Giants Flail, Look To Chip Stocks For Gains
  • 10 days Central America Is Ready For The Bitcoin Hustle
  • 12 days China’s Video Game Restrictions Unlikely To Slow Down Booming Industry
  • 13 days Top Performing Stocks As Inflation Fears Grow
  • 14 days US Airline Stocks Take A Beating On New EU Restrictions
  • 15 days This IPO Could Open Sustainable Fashion Floodgates
  • 16 days Crypto Crime Nets Another $2B Fraudster
  • 18 days This Week’s Hottest Meme Stocks
  • 19 days Why World Markets Should Be Watching Germany Closely
  • 21 days Could ‘Cultured’ Meat Rival The Plant-Based Megatrend?
  • 24 days ‘Easy Money’: Crypto Is Still Attracting Newbie Investors
  • 25 days Foreign Syndicates May Have Stolen Up To $400B In COVID Benefits
  • 26 days Gold Jumps Above $1800 Ahead Of Jackson Hole Summit
  • 26 days International Banks Blacklist Afghanistan Following Taliban Takeover
  • 28 days China’s Tycoons Are Getting A Serious Reality Check
  • 29 days U.S. Cannabis Space Heats Up With Telling Tilray Acquisition
  1. Home
  2. Markets
  3. Other

Expect Mine Closures In This Key Gold Mining Nation

I wrote yesterday about the collapse of mining in key African gold nation Tanzania. And today, emerging news shows another major gold producer entering crisis.

South Africa.

The dire warning on South Africa’s gold sector came from ratings agency Moody’s. With that group releasing a report saying that mine closures are likely close at hand.

Moody’s noted that recent moves by South Africa to amend its mining code have created great uncertainty in the country. With requirements like increased Black Empowerment ownership and higher royalties weighing on the minerals sector.

With these stricter financial conditions looming, Moody’s said it sees few mining companies investing significant capital in South Africa. As the agency put it, “Without a framework that provides policy predictability and certainty, Moody’s expects mining companies to keep a tight rein on capital expenditure.”

And as Moody’s sees it, that could be a death knell for the industry.

The report went on to note that without expansion capital, many of South Africa’s mines are unlikely to be viable. With the authors saying that many operations have been kept on life-support recently by a weak rand — which is now strengthening, putting increasing pressure on operations.

Moody’s believes that all leads to an inevitable end game: “If the substantial expansionary investment required to reconfigure loss-making mining operations and make them profitable is not forthcoming, mines will either be restructured or closed.”

Related: Can Putin Bring Peace To The Korean Peninsula?

This is the first full-out warning of imminent mine closures. And follows closely on public comments from South African Chamber of Mines CEO Roger Baxter noting that the mining sector is in “crisis”, with recent government policies having “frozen new investment”.

If closures are indeed close at hand, things could get very supportive for gold prices — with South Africa still being the world’s 7th largest producer of the yellow metal. Watch for announcements on specific mine shutdowns here to see if this trend will indeed catch a spark.

Here’s to the point of no return.

By Dave Forest

More Top Reads From Oilprice.com:

Back to homepage

Leave a comment

Leave a comment