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SOUTH AFRICAN GOLD South African Gold Enters Survival Mode South Africa's gold industry is in a fight for survival. Declining production, rampant labor unrest and ever deeper mines are crushing once-mighty producers. By Gavin du Venage AngloGold Ashanti's Tau Tona mine plans to integrate a new backfill technique with a reef boring system. Union demands for above-inflation pay rises are only the latest blow to the industry, leading many to ask if it's time to fundamentally rethink the way South African mining is carried out. "We can't continue giving double-digit increases when productivity is declining," Gold Fields CEO Nick Holland said at a recent briefing. "That's not sustainable. Everybody knows that. All we are doing is hastening the end of the industry. You can't expect people to keep running businesses at losses. The mining industry has to be restructured." As a result, mines are adopting different tactics to survive. Recently, Gold Fields unbundled three old, deep-level gold mines in South Africa into a newly listed company, Sibanye Gold, leaving it largely free of local operations and retaining only its modern South Deep operation that is less reliant on labor. The newly orphaned Sibanye announced it will axe 1,110 jobs as it struggles to keep its Beatrix West mine in the Free State going 40 E&MJ; • JULY 2013 after a fire shut it down in February. Beatrix West contributed 80,000 oz/y of gold, a quarter of Beatrix's annual output. At the end of May, Sibanye CEO Neal Froneman said the company was also going to halt development expenditure, which it hoped would cut costs sufficiently to return the mine to breaking even, if not making a small profit, at the prevailing rand gold price. There is enough development underground to keep the mine running for a year, Froneman said. Analysts have wondered whether competitor Anglo Gold Ashanti would follow the Gold Fields lead and spin off its South African assets, leaving it to focus on its global operations. So far, however, the company has denied it intends doing so. South Africa has produced around 40% of all the gold ever mined, according to Reuters, but output is now shrinking at 7% per year, and the trend is accelerating. Even though South Africa is still believed to have 47,000 metric tons (mt) of gold reserves, or a global share of 12.8%, according to the U.S. Geological Survey, the one-time champion has slipped to fifth in production behind China, Australia, the U.S. and Russia. Realizing the Industry is Losing Ground The South African government has acknowledged that mining requires change to survive, and that newer methods are needed. Much of the conversation centers around productivity, and the need for new technology. "There are misconceptions about productivity," said Roger Dixon, chairman and corporate consultant at SRK Consulting in Johannesburg. "For those who think that it can be increased by getting rid of labor and introducing technology, I have news for them: it's not as easy as that." Deep level mines have to be accessed by shafts that drop up to 4 km into the earth. Workers then have to travel to the face, www.e-mj.com