Australia-listed West Wits Mining on Thursday celebrated the launch of Qala Shallows west of Johannesburg, South Africa’s first underground gold mine in 15 years.
Mineral & petroleum resources minister Gwede Mantashe praised the accomplishment, calling on other mid-tier mining companies to fill the gap left by decades of extraction.
“In the Witwatersrand, there is a lot of gold that has been left behind, and it is the mid-tier companies, not artisanal miners, that are actually going to make it happen,” Mantashe said.
“All the names that dominated SA mining have disappeared from our vocabulary. Anglo American opened in the Free State gold fields two years after the National Party took power (1950) and left the gold fields two years after the ANC took power (1996). There’s no AngloGold in South Africa today.
“So, West Wits is creating new hope. I hope mid-tier companies will join you in rediscovering gold that was left behind by those big giants that were very careless in their mining.”
So West Wits is creating new hope. I hope mid-tier companies will join you in rediscovering gold that was left behind by those big giants that were very careless in their mining
— Gwede Mantashe
The mine itself is relatively small, representing a $90m (R1.5bn) investment and a modest 70,000 ounces of output per year. However, it marks a rare highlight in the story of SA’s waning gold sector.
SA was once the world’s largest gold producer, responsible for two-thirds of global supply. Now, it is not even among the top 10 biggest producers, with output shrinking more than 70% over the past two decades.
Gold production from SA’s ageing, deep-level mines has been eroded by rising operating costs, domestic policy concerns and a lack of new ore bodies.
The socioeconomic impact is significant. As local mines gradually failed to compete with those in other gold-producing countries, waning investment in the local sector has seen SA’s gold mining workforce shrink from more than 500,000 in 1988 to just 94,000 in 2023.
Gold and platinum group metal heavyweight Sibanye-Stillwater told Business Day last year that in addition to persistent cost pressures, the government’s mismanagement of the economy and policy uncertainty were behind the steep drop in SA’s gold production.
With a workforce of 1,000 people, Qala Shallows will reach 850m underground at its deepest, a far cry from legacy mines such as Mponeng and Driefontein, which extend more than 3km below the surface.
The asset is forecast to generate $2.7bn over its 17-year lifespan, with a steady state, all-in sustaining cost of $1,181/oz, according to its definitive feasibility study.
Bloomberg reported that before Qala Shallows, the most recent underground mines to start production in South Africa were Gold One Group’s Modder East and Burnstone operations, which opened in 2009 and 2011, respectively.
The investment comes as the price of gold has soared almost 60% this year, unlocking opportunities to extract wealth from gold deposits and tailings dumps previously deemed uneconomical.
Pan African Resources last month laid out plans to cash in on the record price by building a R2.8bn facility that will process 600,000 tonnes a month of leftover gold mine waste in Soweto and produce 30,000oz-35,000oz of the bullion a year for 15 years.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.