Dip in Gold Prices Perils S. Africa Mines

A mile underground, Mogolodi Kelebetse bored into a wall of gray rock with an oversized drill, sounding like a one-man heavy metal band.

Kelebetse and the drill were squeezed into a 3-foot-high crevice. His helmet lamp cut through air thick with dust. The heat and humidity kept a steady stream of sweat rolling off his chin.

“Anything can happen down here. Rock bursts, cave-ins, fires,” supervisor Peter van Wyk shouted into a visitor’s ear. Then he added: “I’d still rather spend a day underground than on the surface.”

The nether world of South Africa’s gold mines has always been the domain of rugged men. But today, times are as tough above ground as below for the century-old mining industry.

With the world gold price hovering around $350 an ounce, its lowest in seven years, the mines that once were the foundation of Africa’s strongest economy are struggling to survive. South Africa’s 33 major mines need a price of $400 to thrive.

Gold’s reputation as a financial safe haven in troubled economic times has diminished and investors have more options in an increasingly global economy.

In the last year, three mines have announced plans to close. Mine payrolls have been cut from 530,000 to 424,000 since 1987, and an additional 6,000 layoffs were announced in early June.

“We’re definitely in our twilight years,” said Dave Smith, manager of Blyvooruitzicht, a 55-year-old mine set in fields of golden grass west of Johannesburg. The number of miners working it has shrunk from 12,000 to 7,500 workers in four years.

South Africa is still the world’s largest gold producer, with an output of 600 tons a year, and the gold industry remains its biggest industry.

Like most mining towns, Blyvooruitzicht would not exist if it weren’t for the thin seam of ore underneath.

It covers 8 square miles and has churches, three schools, stores, a golf course, hospital and 36 soccer teams. Blyvooruitzicht is owned by Rand Mines, one of South Africa’s six mining companies.

Around the clock, workers drill, blast and haul up tons of rock through dozens of darkened passageways.

It took 45 minutes to reach Kelebetse.

The trip started in a rattling, water-logged elevator cage that sinks a mile in three minutes. Then came a 2-mile horizontal journey in a cramped cable car. A narrow wooden stairway led to the spot where Kelebetse was drilling holes for the explosives that blast away the ore and rock.

An average ton of rock yields six grams of gold, which makes a pellet roughly the size of an aspirin. A week’s output at Blyvooruitzicht is about 10 gold bars, each the size of a bread loaf and worth more than $250,000.

Inexpensive black labor made South African mines the cheapest in the world to operate for generations, but they now are among the most expensive because of deeper shafts and rising wages.

A black miner makes $350 to $525 a month, an above-average salary for blacks. About 600 are killed in accidents each year and most live in cramped all-male hostels, away from their families, for up to 11 months a year.

“I want to bring my family, but I’ve got no rights to do it,” said Patrick Setatshabele, a father of eight who has spent 26 years at the mine.

Setatshabele never thinks of quitting, however. “If I lost this job I’d have no choice--I’d have to steal,” he said.