Research: Empty gold mines heading for a crisis Reply

Our Research posts are about the latest academic research being done in the School of Economics. This week:

THE DECLINING PRODUCTION BY GOLDMINES IN SOUTH-AFRICA

by Prof. Ewert Kleynhans (NWU)

This study investigates the decline in the production of gold by South African goldmines, especially in the Dr. Kenneth Kaunda District Municipality (DKKDM). The research began when academics started to be concerned about the mines that are closing down in the region and many of their friends losing their jobs. It was realised that this could lead to poverty, hardship and all the economic development challenges that it may bring along.

The Dr. Kenneth Kaunda District Municipality (DKKDM) includes the local municipalities of Klerksdorp, Potchefstroom, Ventersdorp, Merafong City and Wolmaransstad. The economies of these municipalities are mainly dependent on gold mining. The reserves of the South African goldmines are declining as their gold deposits are becoming depleted. A large section of the population of the mining industry could be unemployed in the near future.

Gold reserves in South Africa are declining fast, while platinum is gradually taking its place as the leading export product on world markets. South Africa’s main export products in 2009 were respectively monetary gold (R53.4 mil.), low grade coal (R33.98 mil.) and semi-manufactured platinum, which together with unrefined platinum attracted foreign reserves worth R45.3 mil. Other products containing gold and scrap metal gold are now in the 45th place on the list of export products (Trade Map, 2010). More…

Reply

We are starting off the week by reblogging a post by School of Economics colleague Requier Wait.

Requier Wait

Based on estimates from the EIA, South Africa’s Karoo region could hold an estimated 485 trillion cubic feet (tcf) of technically recoverable shale gas reserves. Many argue that the Karoo’s shale gas can be a “game changer” for South Africa’s energy sector. The method used to extract shale gas, hydraulic fracturing or “fracking” has been a topic of intense debate. The proponents of shale gas emphasise the potential economic benefits whilst the opponents stress the environmental dangers of fracking, such as the contamination of underground water. At this stage there is no certainty on the actual reserves present in the Karoo basin, making it difficult to compare the potential benefits and costs of developing this resource. For this reason, only ex-ante predictions of the economic impacts are possible.

The South African government has partially lifted the initial moratorium on fracking to allow exploration activities (but not yet fracking). A detailed…

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Nuus uit die Skool Reply

Onder hittegolf-toestande in Potchefstroom was die ekonome hierdie week hard aan die werk en daar is ‘n paar nuusbrokkies uit die Skool:

Daar was ook tyd vir kuier by SAFA

Daar was ook tyd vir kuier by SAFA

  • Die Risikobestuur-dosente, Drs Heymans, van Heerden en Mnr Dreyer was hierdie week by die jaarlikse konferensie van die South African Finance Association (SAFA).
  • Prof Wilma Viviers van die TRADE navorsingsnis was by ‘n TIPS werkswinkel oor die nasionale uitvoer strategie en het daar ‘n aanbieding gedoen oor TRADE se Decision Support Model.
  • Prof Krugell was deel van die Fakulteit se program vir die ontvangs van die eerstejaars en het aanbiedings gedoen oor e-leer en persoonlike finansies.
  • Prof Kleynhans het NERSA se openbare verhoor oor Eskom se voorgestelde tariefverhogings hier in Potchefstroom bygewoon. Vandag is hy by ‘n werkswinkel van die SA Akademie vir Wetenskap en Kuns, maar meer daaroor volgende week.

Verder staan ons reg vir ‘n besige week. Volgende week ontvang ons 2013 se Honneurs en M-studente en die voorgraadse seniors is hier vir registrasie.

 

News: NERSA hearings in Potch Reply

The National Energy Regulator of South Africa (NERSA) held a public hearing on Eskom’s proposed 16% tariff increase in Potchefstroom on 23 January 2013 and the School of Economics of North-West University were also represented there. The chairman managed the proceedings with strict discipline, and only the six NERSA panel members were allowed to ask questions. Security was tight and a handful of COSATU members were singing in the street the whole time, providing some background music.

At the hearings

The panel members

Eskom started the proceedings with a presentation on their cost needs and how tariffs, loans, and equities are used to finance their operations. It was noted that their focus is on the wellbeing of small businesses and the poor, and that restructuring of their operations has made Eskom more efficient, saving billions of rand. The proposed increase is for a five year period, but they argue that it will lower the monthly payments of consumers. Over the period they will have to pay R140 366 Billion in interest, but at the end be able to pay a net return of R46 497 billion to investors. It was argued that the proposed tariff increase is in line with Eskom’s expenses to provide in the demand for electricity.

COSATU’s spokesman first complained that the hearings are too early in the year, as most of their members are still on holiday. He said that the proposed increase is 110% which is outrageous, and also requested that the free basic electricity allowance should be raised from 50 to 200 kWh. They don’t reject the user pay principle, but do not want the poor to be marginalised. Quality public services are the right of the poor.

Cosatu at the NERSA hearings

Cosatu at the NERSA hearings

The spokesman of NUMSA said, when setting tariffs sustainability, the social impact and economic growth should be considered. The higher electricity tariffs will lead to job losses, higher expenses for households, and indirect cost increases, such as the price of food. COSATU’s head of research answer most of the panel’s questions addressed to COSATU as well as NUMSA. He indicated that Escom is still inefficient and wasting money, for example on the use and storage of coal. COSATU is against the proposed tariff increases, and might make the country ungovernable, if it has to.

– Prof. Ewert Kleynhans