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Darren Schuettler
Johannesburg, July 11: South Africa said last week a high-profile delegation will tour European capitals next week to demand a moratorium on central bank gold sales which threaten economies and thousands of jobs in Africa.
``We want a moratorium on the selling. We would like to present our views and give evidence of the impact of the sales,'' South African minerals and energy minister Phumzile Mlambo-Ngcuka told reporters after an emergency meeting of the country's Gold Crisis Committee.
The meeting of government ministers, gold industry chiefs and union leaders was called after the auction of 25 tonnes of UK gold on Tuesday sent bullion prices diving to fresh two-decade lows and prompted thousands of angry miners to protest outside the British embassy on Wednesday.
Since the Bank of England announced in May that it would sell off 300 tonnes of reserves, the gold price has dropped more than $30 an ounce, a loss of 10 per cent of its value.
``I think there is no argument that this pattern of Britishsales is disrupting the market and damaging the gold price,'' said chief executive Bobby Godsell of the world's largest gold company, AngloGold.
The South African delegation will include Mlambo-Ngcuka and possibly finance minister Trevor Manuel, National Union of Mineworkers' president James Motlatsi and Godsell.
Other African gold producers such as Ghana, Mali and Tanzania will be asked to join the group, which travels to London on Monday and then France, Germany and Switzerland.
South Africa's business, government and labour council, Nedlac, joined the call for an embargo on gold sales, including the sale of 10 million ounces of International Monetary Fund (IMF) gold to finance debt relief for poor nations.
Nedlac noted that 30 of the 41 countries targeted for IMF debt relief are either gold producers or a large part of their workforce is employed in the mines of other countries.
South African gold shares had a modest 1.5 per cent recovery on the Johannesburg bourse on Thursday as London bullionprices ended firmer at $257.40 an ounce. But the key index failed to recoup a loss of over five per cent on Wednesday.
The bullion slump has exacerbated the crisis in an industry that has shrunk in recent years, but remains South Africa's biggest foreign exchange earner. Thousands of jobs have been lost in restructuring after apartheid-era sanctions were lifted in 1994 and the economy faced global competition.
The crisis committee, set up last year to find ways of saving jobs, said six mines had applied to fire over 11,000 mineworkers since the UK announcement.
That does not include another 5,000 miners who face unemployment at bankrupt ERPM, one of the country's oldest mines. The government, which owns 18 per cent of ERPM, will meet liquidators on Friday to help seek a buyer for the mine and protect as many jobs as possible.
Other gold companies say they are strong enough to ride out the storm. Durban Roodepoort Deep (DRD) said a flexible hedging programme would protect its capital budget andmarginal gold output for at least the next year.
``The jittery market is generating a great deal of speculation, not all of it well informed,'' DRD chief executive Mike Prinsloo said on Thursday.
Nevertheless, industry officials estimate about 40 per cent of South Africa's production is uneconomic at these price levels, endangering 80,000 mining jobs, about a quarter of the total mining workforce, and hurting local communities where 8-10 people frequently rely on a single miner's pay cheque.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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