• 3 hours Mexico Kickstarts War On Junk Food
  • 11 hours How America Could Go Green Right Now
  • 1 day Russian Prestige And American Politics: The COVID Vaccine Race
  • 1 day Is The Silver Rally Over Or Just Getting Started?
  • 2 days Alibaba-Backed Tesla Competitor Set To IPO In The U.S.
  • 2 days Emerging Economies Could Get Left Behind In Race For COVID Vaccine
  • 3 days Dead Malls Could Be Amazon’s Next Target
  • 3 days Unpacking Biden's Energy Plan
  • 3 days Russia Aims To Become World's Top Gold Producer
  • 4 days Global Tech Stocks On Edge Over Trump TikTok Ban
  • 4 days Cobalt Squeeze Threatens The Electric Vehicle Boom
  • 5 days COVID Has Sparked A Surge In Cybercrime
  • 5 days Precious Metals Bulls Still Have Plenty Of Room To Run
  • 6 days The U.S. Has The Tech To Go Green, But Will It Use It?
  • 6 days Massive Losses Force Russian Commodities Giant To Slash Dividends
  • 7 days Markets Up On Stimulus Hope
  • 7 days UK To Invest In Europe's First Geothermal Lithium Recovery Plant
  • 8 days TikTok Takes Center Stage In US-China Tech War
  • 8 days Are Semiconductor Stocks Overvalued?
  • 9 days Jobs Report Doesn’t Say Much Amid COVID Uncertainty
Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

  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