The industry South Africa was built on is in steep decline

Gold was the foundation of South Africa’s economy for over a century, shaping its cities, workforce, and global standing. However, it is now in steep decline.

The discovery of gold-bearing reefs near Johannesburg in 1886 triggered a mining boom that propelled the country to become the world’s leading gold producer.

By the 1970s, South Africa was mining over 1,000 tonnes of gold annually, fueling economic growth and employing hundreds of thousands.

However, the industry that once defined the nation is in steep decline. Production has plunged by 80% over the past 35 years.

Even more concerning is that the gold mining workforce has shrunk from over half a million in 1988 to just 94,000 in 2023.

Once-mighty mines are shutting down, and informal miners—zama zamas—now scour abandoned shafts for residual gold.

“The history of gold for a century after 1886 is the history of South Africa,” said Stellenbosch Institute for Advanced Study (STIAS) fellow Duncan Money in a 2024 seminar.

However, he warned, “South Africa’s gold industry is in steep decline and may cease to exist within a generation.”

The decline was not just due to dwindling deposits. In 2023, PwC reported that South Africa still had 68 million troy ounces of gold reserves, the equivalent of 27 years of production.

As extraction costs soared and deep mining became increasingly complex, cheaper sources emerged worldwide.

“The South African gold industry went from dominance to irrelevance,” said Money.

Gold losing its shine

While still a significant player in the global gold market, an analysis by The Outlier shows that South Africa’s gold industry produces 80% less gold than it did 35 years ago, from 620 tonnes in 1988 to 97 tonnes in 2023.

Additionally, it has shed 80% of its workforce during the same period.

In 1988, more than half a million people in South Africa worked in gold mining. By 2000, that number had fallen to less than half, at 217,000. By 2023, it had fallen to 94,000 employees.

In 2022, the Auditor-General said that at least 700 old gold mines were closed in South Africa. Although the mines are supposed to be sealed, many are not.

An informal economy has grown around them, with former miners and other workers extracting residual gold. Many of these miners, known as zama zamas, operate without permits.

Minister Gwede Mantashe said in January that the country lost an estimated R60-billion to illicit trade in 2024.

The fall of gold production

Money argued that the industry’s fall stemmed from its structure, not just diminishing deposits or government policy.

“I believe it’s in this structure that we can find the explanation of the industry’s precipitous decline.”

Gold’s appeal, he noted, is paradoxical: “Compared to other metals, it’s soft, expensive, and generally quite useless.” Yet its durability and rarity made it a lasting store of value.

Unlike other gold rushes, South Africa’s deposits were vast but deeply buried. “Johannesburg’s gold was surface-level at first, but this was the tip of the iceberg.”

Mines stretched deep, making extraction difficult. “Crown Mines stretched over 5.5 km in 1920—roughly the width of Stellenbosch,” he said.

By the 1980s, mines had “20,000 people underground daily, in 900 km of tunnels and three-kilometre-deep shafts.”

Heatstroke deaths were common as companies “experimented on workers to find the limits of human endurance.”

The 1990s saw the collapse of mining houses. “The industry crumbled like dust,” said Money.

As extraction costs soared due to deep, complex ore bodies and geological challenges, cheaper gold sources elsewhere made South African mines economically unsustainable.

“The South African gold industry went from dominance to irrelevance.”

South Africa’s share of world production declined from over 70% to about 3%, and the number of miners working dropped – down to about 100,000.

What has seen growth?

The South African mining industry contributed 6% of the country’s total nominal GDP during the first three quarters of 2024, or R432.7 billion in monetary terms.

Platinum and coal have surpassed gold in terms of employment within South Africa’s mining sector.

The country holds over 80% of the world’s platinum group metal deposits, and the number of people employed in platinum mining has increased significantly, rising from 85,000 in 1988 to 183,000 in 2023.

In 2023, just over 96,000 individuals were employed in coal mining.