OWN CORRESPONDENT, Johannesburg | Thursday 11.50am.
SOUTH Africa on Wednesday rebuked Britain for its decision to auction off 25 tons of gold, and thousands of newly unemployed miners marched on the British embassy in protest.
“The South African government finds both incomprehensible and unacceptable the insensitivity of the British government and its monetary authorities towards the plight of gold producing countries on the handling of gold sales,” the cabinet said in a statement issued to reporters in Pretoria.
Meanwhile, more than 2000 miners, many of them soon to be laid-off from East Rand Proprietary Mines Ltd (ERPM), which on Tuesday filed for liquidation, waved placards and chanted slogans outside the British High Commission in Pretoria, handing a petition to the ambassador protesting the gold sale.
Gold slumped again on Wednesday, dropping to a new 20-year low of $256 an ounce, following Britain’s controversial decision to auction 25 tons of the metal, part of a plan to cut reserves by 415 tons and convert the proceeds into currency.Since the Bank of England announced in May that it would sell off part of its gold reserves, the gold price has dropped more than $30 an ounce, a loss of 10% of its value.
The projected economic impact on South Africa ranges from foreign exchange earnings on exports to potentially tens of thousands of retrenched miners. East Rand Proprietary Mine (ERPM), one of South Africa’s oldest mining companies, said it couldn’t take the low price and the prospect of further bullion auctions any more and applied for liquidation. Five thousand miners will lose their jobs.
Analysts, while cautioning that gold could turn around in the months ahead and that the country has faced the doom and gloom of bullion’s misfortunes before, are getting concerned. “I wouldn’t want to see the price go too much lower,” said Greg Hunter at Deutsche Morgan Grenfell in Johannesburg. If it went below $250 and stayed, we’d really be in trouble. You’d see some fairly drastic plans put in place.”
South Africa’s Chamber of Mines, which represents most of the industry, says 40% of the country’s mines are marginal while the price hangs around $260 an ounce, and 80000 jobs are threatened, about a quarter of the sector’s mineworkers. Six mines have already given notice of job losses totalling 11700.
Archie Phalane, deputy general secretary of the National Union of Mineworkers, which represents virtually all the country’s miners, described sentiment underground as extremely on edge “Workers immediately understand the implications of this. There’s a major concern and it’s been building up for months,” he said.