In an attempt to halt further sales of gold by central banks and the International Monetary Fund, a high-powered South African delegation is visiting Britain and Europe this week to lobby on behalf of the gold industry.
"We want a moratorium on the selling," the Minerals and Energy Affairs Minister, Ms Phumzile Mlambo-Ngcuka, told journalists after a meeting of the Gold Crisis Committee attended by representatives of government, mining companies and the National Union of Mineworkers. "We would like to present our view and give evidence of the [negative] impact of the sales."
The delegation will include three government ministers - Ms Mlambo-Ngcuka, finance minister Mr Trevor Manuel and labour minister Mr Membathisi Mdlad lana - as well as Chamber of Mines president, Mr Bobby God sell, and miners' president, Mr James Motlatsi.
Ms Mlambo-Ngcuka's announcement followed an earlier attack on Britain for reportedly failing to fulfil a promise not to sell its bullion without consulting South Africa. The promise in question was given to President Thabo Mbeki by the Prime Minister, Mr Tony Blair, according to Ms Mlambo-Ngcuka. "We are still waiting," she said. "It was quite a disappointment."
The British announcement on May 7th of its intention to sell more than half of its gold reserves, 415 of its 715 tons, was a major catalyst in the precipitous fall in the gold price. It fell by more than US$30 after the announcement, reaching a 20-year low of less than $256 (€251.1) an ounce by last Tuesday, the day on which Britain sold the first tranche of its reserves. Last week also witnessed "a sad day for the gold-mining industry" in South Africa when the managing director of East Rand Proprietary Mines (ERPM) announced that a decision had been made to close the mine, one of the oldest in South Africa. Founded in 1893, the mine has been struggling for more than a decade.
The latest plunge in the gold price was the final straw. The government, which had helped to sustain the mine through special subsidies, has decided not to provide further bridging finance.
Five thousand miners, most of them black, face imminent re trenchment, a fate which induced them to picket Ms Mlambo-Ngcuka's office with demands for government intervention. The picket came just hours before her attack on Britain for reportedly reneging on a promise.
ERPM's pending closure was, however, merely a symptom of a deeper crisis. A study by the Chamber of Mines shows that, at present gold prices, 40 per cent of South Africa's gold mines are marginal, meaning that their profit margins are so minute that their survival is at stake unless they cut costs drastically.
The crisis facing South Africa's gold-mining industry - and indeed gold-producing countries generally, including those in the 40-odd highly indebted poor countries - was compounded by the announcement last month of plans by the International Monetary Fund to sell 10 million ounces of gold, ostensibly to finance a debt-relief programme for the indebted poor countries.
Responding to the announcement, South African leaders, from Mr Mbeki down, made it clear they believe the cure might be worse than the malady for the poor countries, many of which depend on gold export earnings.
