Gold mining, once the cornerstone of South Africa’s economy, has steadily declined over the past few decades, leading to the loss of more than 440,000 jobs since the late 1980s.

This was shown in data compiled from the Department of Mineral Resources and Energy by The Outlier, which illustrated the mass job losses in gold mining over the years. 

Gold mining in South Africa began around 1886, when gold was discovered on the Witwatersrand. This discovery sparked a gold rush that led to the rapid development of Johannesburg and the rise of a powerful mining industry. 

The deep, rich gold reefs of the Witwatersrand soon became the world’s most productive. Backed by British capital and reliant on cheap black migrant labour under the apartheid system, gold mining grew rapidly through the 20th century. 

The growth was further fueled by technological innovations in deep-level mining and increased global demand.

By the 1970s, South Africa accounted for over two-thirds of global gold output, with production peaking at over 1,000 tonnes. 

This boom made gold the backbone of the South African economy, funding infrastructure and industrialisation. 

But the golden era did not last. From the 1980s onwards, declining ore grades and rising costs began to weigh down the industry. 

Gold mining’s contribution to GDP has dropped sharply, from around 20% in the early 1980s to just 6.3% in 2023. Employment in the sector followed. In 1988, gold mines employed just over 536,000 people.

This number fell to 217,000 by 2000 and 94,000 by 2023, a staggering loss of 442,000 jobs over 35 years, equivalent to more than 12,000 jobs per year or 35 per day.

But the closure of gold mines doesn’t mean there’s no gold left in the ground. A 2023 PwC report found that South Africa had 68 million troy ounces of gold reserves left – enough for 27 more years of production.

However, the cost of mining gold in South Africa has become significant. To reach the gold deposits, miners sank shafts to incredible depths.

This makes extracting the gold increasingly expensive. This cost is then compounded by the country’s rampant costs of electricity and water. 

South Africa is too expensive

 Commenting on the decline of gold mining in South Africa, the Minerals Council South Africa (MCSA) said several challenges impact the mines. 

“South Africa’s gold sector is defined by deep-level, labour-intensive underground mining, which presents significant risks and challenges,” said the MCSA. 

It explained that to reach the remaining gold, mining companies must drill deeper than ever before, often kilometres underground. 

“These extreme depths bring searing heat and humidity, making working conditions difficult and reducing labour productivity. Maintaining safety becomes more complex, and operating costs skyrocket.” 

One of the industry’s most significant pressures is the cost of electricity, which is essential for deep-level mining. 

“The industry also faces the burden of high electricity costs, which are particularly onerous for deep-level gold mining operations,” the MCSA said. 

Eskom has historically applied for substantial tariff increases. Whether these increases are approved in full or reduced, they pressure mining companies immensely.

The MCSA added that rising energy costs have three consequences. First, they erode profitability, pushing companies to spend more on energy efficiency and shift to alternative sources like solar and wind. 

Second, they shorten the lifespan of the mines. “Higher electricity costs make grade mixing economically unviable,” the council explained, meaning mines can only focus on the highest-grade deposits. 

This leads to earlier closures as the lower-grade reserves become too costly to extract, although they are still viable.  

Lastly, electricity is a significant fixed cost, as deep mines require continuous pumping, cooling, and ventilation—even when no ore is extracted. 

According to the MCSA, as much as 20% of operating expenditure is now allocated to electricity. This burden, combined with water costs and declining ore quality, has led many companies to shut down operations rather than continue to mine at a loss. 

Gold production has dropped dramatically—from 620 tonnes in 1988 to just 97 tonnes in 2023.

While gold still lies deep underground, the economics of extraction, compounded by steep electricity and water costs, have made much of it unreachable.
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Originally published on BusinessTech