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39% Of South African Gold Production Is Now Offline

Tyler Durden's picture




 

Over a month ago, when discussing the implications of the South African miner strike that will not end until all local mining companies' income statements are crippled after succumbing to wage hike demands, we said "Expect more South African mines to shutter, as gold production in the world's third largest gold producer grinds to a halt, and the local workers grasp they had the leverage all along. Should the South African example spread to other countries, then expect the price of gold to soar regardless of how much printing the central planners engage in the coming weeks and month." Today, we find out just what the final tally is , as this too prediction is proven correct: "Strikes at South African gold mines have shut about 39 percent of capacity, including at AngloGold (AGG) Ashanti Ltd. and Gold Fields Ltd. (GFI), as unofficial walkouts spread across the country in demand of above-inflation pay increases." And boom: "AngloGold, the world’s third-largest gold producer, today said all of its South African mines have been halted. Gold Fields Ltd. also lost a metric ton, or about 32,000 ounces, of production after strikes at its KDC and Beatrix operations." That's ok, Bernanke will just print more gold.

Nobody could have foreseen the complete collapse in South African mining production. From Bloomberg:

“Workers are now demanding wage increases according to the ‘Lonmin settlement’,” David Davis, an SBG Securities Ltd. gold analyst, said in a note. “Strike action may well spread from other mines to Harmony’s mines and to other industries.” Coal of Africa Ltd. (CZA) and transport workers have also been on strike.

 

Wage demands and direct action spread as workers sidelined traditional representatives for negotiating with management such as the National Union of Mineworkers, a backer of the governing political party. At Lonmin, workers appointed their own leaders. Julius Malema, expelled by the ruling African National Congress, has called for disruption and state control at mine operations.

 

Employees are gathering at the Bleskop stadium, where their appointed leaders will report back on a meeting with mine owners negotiated by the Commission for Conciliation, Mediation and Arbitration yesterday, the South African Press Association said.

Bernanke will only have to print 306,000 ounces to replace lost output (so far):

Anglo American Platinum (AMS), the largest producer of the metal, has lost about 20,000 ounces of output as workers refuse to report for duty at its Rustenburg operation, the company said today. The stock declined 4.4 percent in Johannesburg trade.

 

Impala Platinum Holdings Ltd. (IMP), the second-largest producer, raised pay to halt a six-week strike in January and February at Rustenburg, the largest mine producing the metal. Workers have since made new demands, Johannesburg-based Impala said Sept. 11.

 

More than 20,000 freight transport workers are also on strike, demanding a wage increase of 12 percent, SAPA said.

 

Harmony Gold Mining Co. said it’s unaffected by strikes.

 

AngloGold produced about 306,000 ounces in South Africa in the first quarter and Gold Fields’ KDC West and Beatrix about 212,200 ounces. The nation’s gold output was 1.35 million ounces in the quarter, the Chamber of Mines says. It was the fifth- biggest gold producing nation in 2010, according to GFMS Ltd.

As a reminder, South Africa is, well, was the world's third largest producer of gold:

In other news, the strikes will continue until gold prices collapse completely due to zero supply and ever rising demand. Don't ask - new normal math.

 

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Wed, 09/26/2012 - 09:37 | 2831574 LULZBank
LULZBank's picture

Strike Bitchezz!!!

Wed, 09/26/2012 - 09:44 | 2831593 GetZeeGold
GetZeeGold's picture

 

 

No problem......we've got some substitute referees ready to go.

 

Oh wait.....this isn't ESPN.

 

Nevermind!

Wed, 09/26/2012 - 09:53 | 2831633 Pinto Currency
Pinto Currency's picture

 

Expect gold down $100 on this news. 

What a farce the manipulated markets have become.

Wed, 09/26/2012 - 09:58 | 2831646 Precious
Precious's picture

39% is offline and 1% is in a morgue.

Wed, 09/26/2012 - 10:00 | 2831664 Pladizow
Pladizow's picture

Irrelevant!

The sheep have access to as much GLD as they want.

Wed, 09/26/2012 - 10:15 | 2831756 Bastiat
Bastiat's picture

Right; and GLD reduces the tungsten risk by having so few bars.

Wed, 09/26/2012 - 10:24 | 2831812 Pladizow
Pladizow's picture

Bingo, lets break some golden windows with tungsten bricks!

Wed, 09/26/2012 - 10:36 | 2831884 BaBaBouy
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GOLD Manip Fest IS ON!!!

NYC, Same Fucking Time, Same Fucking Place...

 


Wed, 09/26/2012 - 10:16 | 2831758 BaBaBouy
BaBaBouy's picture

Strikes Or No Strikes, GOLD $50K, Bitchezzz...

Wed, 09/26/2012 - 10:21 | 2831794 Clashfan
Clashfan's picture

I hope it goes down 150. Buying opportunities should be appreciated.

They won't last much longer.

Wed, 09/26/2012 - 10:25 | 2831821 fuu
fuu's picture

I would prefer down to $150.

Wed, 09/26/2012 - 12:59 | 2832618 lincolnsteffens
lincolnsteffens's picture

One day only fire sale then back to normal manipulation.

Wed, 09/26/2012 - 09:52 | 2831629 TheGameIsRigged
TheGameIsRigged's picture

No need to print gold....just use Tungsten...it's cheaper!!

 

Wed, 09/26/2012 - 10:00 | 2831663 Pinto Currency
Pinto Currency's picture

 

At least gold plated tungsten is something.

Imagine those investors at the LBMA who will get nothing.

Wed, 09/26/2012 - 09:39 | 2831584 LULZBank
LULZBank's picture

Gold is spiking up on the news...

Wed, 09/26/2012 - 09:46 | 2831601 Xibalba
Xibalba's picture

fundies didn't get the memo about paper gold not actually being, well.....gold.

Wed, 09/26/2012 - 09:40 | 2831585 whopper
whopper's picture

"It was probably a mistake to allow gold to rise so high."
-- Paul Volcker, ex Federal Reserve Chairman in looking back at the rise of gold from $35 to $850 during the 1970s, per "Paul Volcker: The Making of a Financial Legend" by Joseph B. Treaster

 


Wed, 09/26/2012 - 09:44 | 2831594 Cognitive Dissonance
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One does not "allow" something to do anything unless they at least believe they have control over it.

Period. End of sentence.

Wed, 09/26/2012 - 09:45 | 2831599 LULZBank
LULZBank's picture

Full stop?

Wed, 09/26/2012 - 09:51 | 2831609 Cognitive Dissonance
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Take your hand off the mouse and step away from the computer "full stop". :>)

BTW Gold is not spiking from that news. Which sorta proves a point. The paper Gold herd ain't that much different from the stock, bond and currency herd.

They control the paper PM markets for short periods of time, long enough to do serious damage. Stampede anyone?

Wed, 09/26/2012 - 10:07 | 2831710 fuu
fuu's picture

BTFD!

Wed, 09/26/2012 - 09:50 | 2831620 Abraxas
Abraxas's picture

CD, I agree with you and +1 you for that. The emphasis on the ending of the sentence was redundunt though.

Wed, 09/26/2012 - 09:52 | 2831628 Cognitive Dissonance
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I'm a redundant kind of guy.

I'm a redundant kind of guy. :)

Wed, 09/26/2012 - 16:11 | 2833361 Papasmurf
Papasmurf's picture

We know.

 

We know.

Wed, 09/26/2012 - 11:35 | 2832194 Zero Debt
Zero Debt's picture

Volker wasn't jewish.

Wed, 09/26/2012 - 09:43 | 2831592 Croatian Patriot
Croatian Patriot's picture

Tungsten Bitchezz!!!

Wed, 09/26/2012 - 09:51 | 2831624 GetZeeGold
GetZeeGold's picture

 

 

Plate that crap with gold......and sell it - PT Barnum.

Wed, 09/26/2012 - 09:44 | 2831595 Quintus
Quintus's picture

Thank God the supply of paper gold continues to remain as strong as ever.

Wed, 09/26/2012 - 09:45 | 2831597 fonzannoon
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thanks for the last sentence zh. i was just thinking, all that demand from central banks and so little supply...obviously prices have to....fall?

Wed, 09/26/2012 - 09:48 | 2831607 LULZBank
LULZBank's picture

 

In other news, the strikes will continue until gold prices collapse completely due to zero supply and ever rising demand. Don't ask - new normal math.

They are cutting down production due to failing demand and falling prices. Whats so unusual about it?

Wed, 09/26/2012 - 09:54 | 2831638 fonzannoon
fonzannoon's picture

eh?

Wed, 09/26/2012 - 10:13 | 2831737 RSBriggs
RSBriggs's picture

It's called IRONY....  Or in this case GOLDY...

Wed, 09/26/2012 - 09:45 | 2831600 blabam
blabam's picture

Bearish.

Wed, 09/26/2012 - 09:46 | 2831602 Alpo for Granny
Alpo for Granny's picture

However, 100% of the paper gold mines are running at full capacity.

Wed, 09/26/2012 - 09:46 | 2831603 TideFighter
TideFighter's picture

Very weird that the US Mint halted production of the 1/2 ounce gold 1st Spouse coins. They claim

it is a press issue, but....

Wed, 09/26/2012 - 09:47 | 2831604 Kaiser Sousa
Kaiser Sousa's picture

this would explain the last 3 day hit jobs on Gold and Silver right?

RIGHT?????????????????????????????

Wed, 09/26/2012 - 09:47 | 2831605 Van Halen
Van Halen's picture

I'm confused on this one. Why isn't gold spiking on this news? I just checked

http://www.kitco.com/charts/livegold.html

And gold is way down. I would think we'd see a near vertical spike heading upward. Can anyone explain this? Thanks in advance!

Wed, 09/26/2012 - 09:50 | 2831616 LULZBank
LULZBank's picture

People betting against breakup of Euro finally realising their folly and dumping Gold and buying EU paper now.

Wed, 09/26/2012 - 09:55 | 2831639 Van Halen
Van Halen's picture

Thanks, LULZ - this is totally confusing! I wouldn't bet on the EU long term. Short term, maybe. Long term - not with what I see going on in Spain, Greece, and Portugal.

Wed, 09/26/2012 - 10:05 | 2831693 Arnold Ziffel
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I'm long fire extinguishers, fire trucks and ambulances....

Wed, 09/26/2012 - 10:14 | 2831747 RSBriggs
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People don't comprehend sarcasm or irony here, evidentally.  Something about those falling SAT scores, maybe.

Wed, 09/26/2012 - 10:21 | 2831792 fonzannoon
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I understand Irony. That is not irony.

Wed, 09/26/2012 - 10:04 | 2831685 Buckaroo Banzai
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New mine supply has a very marginal effect on the gold price. That's fundamental to the gold market due to the fact that very little gold is actually consumed, in the commodity sense.

Wed, 09/26/2012 - 10:52 | 2831966 Sheeple Shepard
Sheeple Shepard's picture

Gold isn't down, more pieces of paper with gold written on them are being sold than bought/U.S dollar rising against Euro because Europe is going F.U.B.A.R. Of course U.S dollar isn't actually rising just falling at a slightly slower rate than the Euro and whether more pieces of paper with gold written on is actually being sold than bought is up for debate, charts, volume don't mean a thing in a centrally controlled market. Maybe, welcome down the rabbit hole.

If a fish could talk and you asked it what it could see, the last thing it would say would be water.

Wed, 09/26/2012 - 09:48 | 2831608 Sheeple Shepard
Sheeple Shepard's picture

Unintended consequences of price suppression? Chickens coming home to roost me thinks, next step controls on movement of gold bullion?
Hold....hold............HOLD!......

Wed, 09/26/2012 - 09:49 | 2831611 Super Marco
Super Marco's picture

There goes the Rand.

Wed, 09/26/2012 - 09:49 | 2831614 Kina
Kina's picture

ahh yes the CFTC must be on the job today, gold naked short selling to the moon, only happens when CFTC are awake, guaranteed corruption will go unseen, is their mission.

Wed, 09/26/2012 - 09:54 | 2831636 youngman
youngman's picture

They are still working on their report..what has that been 4 years now......lol...I would have flunked that class had I turned my report in that late...

Wed, 09/26/2012 - 10:40 | 2831896 MachoMan
MachoMan's picture

Apparently you didn't go to college in the U.S....  that would be par for the course...  and you would also get in red ink a statement, "thank you for struggling in college, not studying, and partying all the time...  it helps my wallet".

Wed, 09/26/2012 - 09:51 | 2831625 Peter Pan
Peter Pan's picture

The big boys have not only been content to manipulate the price of gold on the market but employers were also only too willing to manipulate their poorly paid workforces to work for a level of wages that were undignified. How many white South Africans are there that go down in the mines and work like the indigenous miners? Very few if any at all. 

Wed, 09/26/2012 - 10:16 | 2831760 Peter Pan
Peter Pan's picture

That down tick tells me I hit someone"s nerve and have struck gold. I take that downtick as a compliment.

Wed, 09/26/2012 - 10:24 | 2831810 squexx
squexx's picture

"Behold the Beast of the Fields!"

Wed, 09/26/2012 - 09:52 | 2831630 teahouse
teahouse's picture

in the meantime someone at CNBC just mention 1650 for S&P 500 by mid of next year.........................................................................................................................

Wed, 09/26/2012 - 11:23 | 2832040 earleflorida
earleflorida's picture

yep... and my *Once` main man Lawrence [fat man] Lindsey [now a POS!- out-of-the-DC-closet is he!!!] became a obsequious myrmidon`ski!

Did you hear the unholy[?] praise lamented by 'The Pimco [dr evil showing some ingrown horns?] Man'- Sire Heil [aka. Neel Kashkari] Cash&Carry [everyday a pimco man have iEye can cause obtuse blindness? - the one exception, Becky Quick] and that Lawrence of 'Latency`Keynesian Scripture' Lindsey, prostrating to their "ChairSatan", how marvelous 'Thy Kingdom Come' under ones Temple said stewardship worships thy chosen one, 'King Benjamin'!  

Christ... i wish Becky would quit and go over to Bloomberg!!!

Wed, 09/26/2012 - 09:53 | 2831632 youngman
youngman's picture

Well we are selling treasuries this week....so they ALWAYS hit the price of gold and silver...it makes them feel better buying the US paper...and now Greece and SPain are back in the news....so all that bank run money has to go somewhere other than Swizerland....even Germany is not a safe haven anymore....golly..this is getting fun...I will predict that in 5 years China will own 70% of all the gold in the world...and its production

Wed, 09/26/2012 - 09:54 | 2831635 abgary1
abgary1's picture

The debt deflation will crush any price gains. Everythiing is coming down.

Wed, 09/26/2012 - 09:58 | 2831643 Abraxas
Abraxas's picture

Curse the day when I decided to invest in the junior miners! Curse KWN and Eric and that squeeky guy Embry!

Wed, 09/26/2012 - 11:40 | 2832227 beachdude
beachdude's picture

And Schiff. Well, not a curse, but I'm pissed off at him.

Wed, 09/26/2012 - 09:58 | 2831645 Sofa King
Sofa King's picture

Isn't gold production being off-line be a good thing?  I'm confused, isn't mining gold the equivalent of Fed printing for the "Real Money" crowd, How can gold be sound money if someone can just dig some up?

 

Now, let it rip...

Wed, 09/26/2012 - 10:01 | 2831673 LULZBank
LULZBank's picture

 

Now, let it rip...

Sorry, we're not in the mood today.

Wed, 09/26/2012 - 12:32 | 2832484 Sofa King
Sofa King's picture

What a buzz-kill...

Wed, 09/26/2012 - 10:03 | 2831683 urbanelf
urbanelf's picture

It only costs a sack of rice, a six pack of PBR, and half of a box of condoms to dig an ounce out of the ground.

Wed, 09/26/2012 - 10:20 | 2831786 LULZBank
LULZBank's picture

They dont use drills and buckets any more?

Wed, 09/26/2012 - 10:47 | 2831942 Long-John-Silver
Long-John-Silver's picture

I remember when it only cost $5 to dig it out of the ground (according to Mathman).

Wed, 09/26/2012 - 14:29 | 2832950 fuu
fuu's picture

That was silver though.

Wed, 09/26/2012 - 09:59 | 2831653 Dr. Engali
Dr. Engali's picture

Oil continues it's slide... I guess everything is right with the world and qe has no impact...Ben sure showed us...or did he? Let's see where we are in 6 months.

Wed, 09/26/2012 - 10:22 | 2831802 fonzannoon
fonzannoon's picture

I wonder what we promised the Saudi's for this kind of favor.

Wed, 09/26/2012 - 10:33 | 2831861 Dr. Engali
Dr. Engali's picture

Probably some of Libya's gold and a piece of the pie in the upcoming war with Iran.

Wed, 09/26/2012 - 10:00 | 2831661 Sparky_ZA
Sparky_ZA's picture

I am proudly South African today. Lets send those PM prices up and have the bankers shit the bed and try send them down. Screw this bullsh1t waiting for things to fall apart. 

I am going to vote for whichever party wants to nationalize the mines. A bad idea I know, but who cares it is all gonna fall apart anyhow. That should send the price of gold even higher.

This country is fucked up anyhow. Someone needs a revolotion soon and create a free country. That iwill be the destination for me and my family. My PM's will have to stay behind.......boating accident.

Can anyone tell me why I have to pay dollar prices for a metal mined in my own country. Just does not seem right? 

Wed, 09/26/2012 - 10:03 | 2831680 LULZBank
LULZBank's picture

 

Can anyone tell me why I have to pay dollar prices for a metal mined in my own country. Just does not seem right?

You did'nt own that country...

Wed, 09/26/2012 - 10:13 | 2831743 Sparky_ZA
Sparky_ZA's picture

You did'nt own that country.....

So blunt yet so true!

Wed, 09/26/2012 - 11:24 | 2832126 paulie
paulie's picture

Can anyone tell me why I have to pay dollar prices for a metal mined in my own country. Just does not seem right?

Two people tried to exchange oil (not gold but still ...) in a currency other than USD: Saddam Hussein and Qaddafi.

You know how gently and politely they have been treated for that.

Or ask Iraqi people if they have an answer to that question.

Wed, 09/26/2012 - 10:07 | 2831707 MrBoompi
MrBoompi's picture

Central banks and rich countries around the world are buying gold in huge quantities, and supply seems limited, but the price doesn't move.  Thanks JPM and TPTB, for fucking over the public once again.  Supply and demand don't matter when fake paper assets overwhelm the physical market. 

Wed, 09/26/2012 - 10:20 | 2831766 RSBriggs
RSBriggs's picture

Until someone stand for delivery, and it's not there...  Guess they could just pay them 10% over spot to forget it, like they do for silver "deliveries" on COMEX.

Not to mention the fact that there is LOTS of Tungsten available....

Wed, 09/26/2012 - 10:19 | 2831775 orangegeek
orangegeek's picture

The morning of the $20 drop in spot gold, another "gold prices to the moon" article comes out.

 

This used to be the case with oil a few months ago.  Oil has done retracing 61.8% of its earlier peak.

 

And gold has broken channel support - the slide is on.

 

http://bullandbearmash.com/chart/spot-gold-daily-september-24-2012/

Wed, 09/26/2012 - 10:25 | 2831815 dolph9
dolph9's picture

I wonder if the royalty companies are the only ones in the mining space that are worthwhile to buy.

I continue to be torn and can't seem to make up my mind.  On the one hand, mining companies like any equities are inherently risky, considerably more risky than the people who pimp them would have you believe.  This lesson all of us should have learned by now.

On the other hand, one can spread their risk around by buying miners.  This mitigates the risk of physical confiscation or loss.  Plus capital gains receive favorable tax treatment compared to collectibles and I don't see this changing anytime soon.

Wed, 09/26/2012 - 10:27 | 2831835 Odin
Odin's picture

I'm so god damn sick of fraudulent spot price... I can only BTFD so much... I give it about a month before it cost 50% more to acquire physical...

Wed, 09/26/2012 - 13:20 | 2832701 moonstears
moonstears's picture

$1830 ish by Christmas? This would be the 14%+ loss in world production /4. Seems viable to me.

Wed, 09/26/2012 - 11:05 | 2832006 indianajohns04
indianajohns04's picture

covered short of AAPL today and switched it over to GLD!

Wed, 09/26/2012 - 11:15 | 2832072 paulie
paulie's picture

Why is gold price supposed to go down 100 ? Shouldn't diminished production cause it to soar ?

Wed, 09/26/2012 - 11:46 | 2832200 moonstears
moonstears's picture

So here's what I did...last week bought cheap out of the money PUTS on GFI(Gold Fields...strike hitting them too, not as widely broadcast in MSM) for Jan, opinions oh learned ones, was this wise or foolish? Really?? If not GFI then who? 1st time I've hedged with the paper market this way. I can see metal up, yet GFI down. Opinions? C'mon and learn me, you market savvy bitchez!

Wed, 09/26/2012 - 17:35 | 2833718 Papasmurf
Papasmurf's picture

Ninty percent of options expire worthless.

Wed, 09/26/2012 - 11:39 | 2832221 Caveman93
Caveman93's picture

Long Moltov's. 

Wed, 09/26/2012 - 11:45 | 2832250 Quinvarius
Quinvarius's picture

Bankers need to start playing gold price whackamole with two clubs now.

Wed, 09/26/2012 - 12:54 | 2832596 Bastiat009
Bastiat009's picture

What? Supply? Who cares? Do I need to remind you that the law of supply and demand has been abolished by the bankers and politicians? In a centralized economy like in Europe or in the US, supply and demand don't matter. The price of gold doesn't depend on the quantity of gold but on the value of the euro, or whatever else banks are willing to manipulate ... (you remember the Libor thing?)

Wed, 09/26/2012 - 13:32 | 2832737 Urban Redneck
Urban Redneck's picture

Oddly enough I am not that concerned about supply coming in RSA, as opposed  to the longer term risk of supply coming offline in West Africa.

There are two fundamental paths one can pursue when combating insurrection- kill them off, or buy them off

 Both are options in South Africa, and the latter will eventually be pursued, in West Africa the case is more problematic...

Wed, 09/26/2012 - 15:11 | 2833084 Ignorance is bliss
Ignorance is bliss's picture

Since when do supply fundamentals have anything to do with the price of Gold?

Wed, 09/26/2012 - 18:45 | 2833913 Suraj Corominas
Suraj Corominas's picture

Isn't mining more precious metals just QE for the gold standard folk?

Wed, 09/26/2012 - 18:45 | 2833914 Suraj Corominas
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