South Africans held their breath as gold tumbled past $350 an ounce in July and kept on breaking through lower and lower barriers, setting back hopes for a strong revival in economic growth this year. Gold, although it is losing its place as the single dominant factor in the South African economy, still has a major role to play. In 1979 it accounted for 70% of export earnings but by last year this had dropped to 21%.
This reduction in the importance of gold exports not only reflects the lower price but also the increasing volume of other exports. The drive to make the South African economy more broad-based and to increase manufactured exports is a major pillar of the government's economic reform programme.
South African gold production peaked in 1970 at 980 tonnes. Last year, 495 tonnes was produced, earning R26 billion ($5.6 billion). South Africa's gold industry is being affected not only by falling prices but also by increasing costs. Far lower grades of ore are now being mined at ever-increasing depths. Labour costs have also increased rapidly in recent years as mine unions have grown stronger and larger.