The gold price has hit $1,500 for the first time. However, it is unlikely South Africa, once the world’s largest gold producer, will reap the benefits of these prices.
South Africa’s gold mines are some of the deepest in the world and so extracting the precious metal has become more expensive over the years. Mines have closed down and retrenched many workers.
Even though commodity prices for gold, copper, coal and iron ore have been rising steadily, many say the South Africans may have missed opportunities to capitalize on these heady levels. Despite the boom times, the South African mining sector has contracted, admitted the government in parliament recently.
Negative perceptions have scared off potential investors for a number of reasons. Inflexible labor laws make employers think twice before setting up shop in South Africa. Infrastructure, like rail corridors to transport coal, for example, is woefully inefficient. Also, there has been much political noise about the possibility of the mines being nationalized. Government keeps on discrediting the calls but the worries still persist for international investors.
South Africa's leaders also point to the new rail links that are being built, the electricity supplies being upgraded and other benefits to doing business in Africa’s largest and most sophisticated economy.
That said, there is still the sense that South Africa is missing the boat.
Interestingly, many economists and mining experts say it’s other African countries that may benefit, because as commodity prices skyrocket, the appetite for risk increases.
The South Africans recently joined the BRIC club of emerging economies and the Trade and Industry minister says that they expect $17 billion of investment over the next three years because of this new relationship. Doors will be opened, new deals will be done, say the South Africans.
However, will it be too late to ride the wave of these boom times?
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