South Africa’s index of gold-mining stocks fell to the lowest since February 2001 as the precious metal slid and local producers battled rising costs.
The five-member FTSE/JSE Africa Gold Mining Index dropped 9.5 percent to 846.93 by the close of trading in Johannesburg. Sibanye Gold Ltd. led the decline, losing 11 percent to 17.50 rand, the lowest since February 2014. Gold reached a five-year low in London.
The metal sank as much as 4.2 percent as the Federal Reserve gets closer to raising U.S. rates for the first time since 2006, strengthening the dollar and reducing demand for haven assets such as gold. Mining companies in South Africa are struggling with lower output from aging ore bodies and labor costs that have more than doubled since 2001. The country is the world’s sixth-biggest producer, down from No. 1 in 2007.
AngloGold Ashanti Ltd., the world’s third-largest producer, decreased 9.7 percent to 85.34 rand, the lowest since it began trading in 1998. Harmony Gold Mining Co. retreated 9.2 percent to 12.50 rand, also the lowest in 17 years.
Unions representing workers from the three companies have rejected the producers’ offer to raise entry-level pay for underground workers by as much as 13 percent in wage negotiations that began last month. The organizations are demanding increases of at least 80 percent while the inflation rate was 4.6 percent in May. Talks are continuing.
FOLLOW NEW AFRICA BUSINESS NEWS ON FACEBOOK @ New Africa Business News.com