South African gold industry fading as margin squeeze erodes output

Johannesburg

SOUTH Africa's gold mines, the deepest and among the oldest in the world, are in big trouble.

The four largest producers in the country are losing money on about 35 per cent of production at current prices, according to company data compiled by Bloomberg. At the same time, higher costs are cutting into profits as electricity bills climb to a record. Workers are also pushing for wage increases, with some threatening to strike if salaries aren't doubled.

The nation, whose Witwatersrand Basin has supplied about a third of all gold ever mined, dropped from the top producer to sixth-biggest in just eight years. Now that miners who still crawl through tunnels using hand drills and dynamite have extracted much of the easy-to-dig metal, companies use modern technology to go deeper. That's another expense, especially when bullion…