ChristianScienceMonitor: South African mining companies are hit hard by two economic trends: One, 11 percent inflation. Second, the falling value of the US dollar – which is the currency that all gold is bought and sold in world wide – means that mining companies here see almost no benefit from higher prices.
In 2009 gold has risen from $750 an ounce to over $1,000 an ounce, but at the same time, the value of the dollar has dropped from 10 rand to 7.5 rand to the dollar. In rand terms, the value of gold has not increased at all.
In addition, South African mines are more expensive to operate than elsewhere.
"In South Africa, gold is up to 3 miles deep. The cost of producing our gold is much higher than it is abroad, so this is another reason why mining companies need to contain their costs."
SHOOT: Salary increases are not the answer. Once you increase salaries, inflation [the average price of food and everything else] will also increase. The painful reality is that today, in whatever industry you're in, you're working harder for less. We're approaching fundamental limits to growth, while the human population increases unabated. What can you expect but diminishing returns under these conditions, and increased unemployment.
But the joyous mood hides a serious problem. These workers are striking for a 13 percent salary increase. Food prices here are skyrocketing, and gold prices are hovering at more than $1,000 an ounce.
"[DRD Gold] is paying us peanuts," says Juliet Sibanyoni, a plant operator, "but we are not monkeys. They should not pay us peanuts."
But DRD Gold, which owns Crown Mines and two other facilities, says record gold prices don't make record profits. Even though gold prices are high globally, the value of the US dollar is weak. By the time DRD Gold converts its dollars into the strong South African rand, the company says that it sees almost no profit.
For an industry that once defined South Africa's gold-rush economy, these are worrying times, and the growing bumptiousness of South Africa's unions is a sign of more trouble ahead.
"The only thing you can do is work harder and work smarter, and who wants to hear that?" says Duncan. "I don't either, but that's the simple truth."
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