Historically gold was the cornerstone of the South African mining industry. Dating back to the great Maphungubwe Kingdom nearly a thousand years ago between 1220 and 1300 gold was the major source of export and exchange with countries such as China, India and Egypt. It was not until about 1852 that a certain JH Davis reportedly discovered large quantities of gold near what is now known as Krugersdorp, on the west of Johannesburg. It is reported that the following year, in 1853, Pieter Jacob Marais discovered gold on the banks of the Jukskei River. The gold rush of the late 1800s is reported to have started in March 1886 when an Australian, George Harrison, discovered a huge outcrop of gold bearing reef on the farm Langlaagte. Within 10 years of this “discovery”, Johannesburg was transformed from a little tented town akin to a temporary military camp to the largest city in South Africa, in the process surpassing the then 200 year old city of Cape Town.
The world’s largest gold reserves were discovered in an area known as the “Witwatersrand” (white waters ridge) of which Johannesburg is part. The rise of Johannesburg was a direct product of the “mineral revolution”. This revolution was set in motion by the discovery of the “golden-arc” which stretches from Johannesburg in the Free State, Barberton and Pilgrim’s Rest in Mpumalanga and Orkney and Klerksdorp in the North-West Province.
This mineral revolution was a catalyst of the second Anglo Boer War between the British and the Afrikaners and accounts for the massive industrialisation that took place in the Reef and created multiple feeder industries. Very soon gold was the single most important mineral commodity produced in South Africa. Legendary companies like Randfontein Estates, formed in 1889, and Anglo American, formed in 1917, owe their legendary status, at least in part, to gold.
Surrounding towns like Randfontein, Krugersdorp, Roodepoort, Carletonville, Springs and Nigel in Gauteng, as well as Barberton and Pilgrim’s Rest in Mpumalanga, Klerksdorp, Stillfontein, Hartebeesfontein and Orkney in the North West and Welkom in the Free State became centres of commerce and a source of employment for thousands of Southern and Central Africans, Britons, Australians and others. The next 150 years were to become the golden years of mining in South Africa.
The depletion of gold resources, the emergence of platinum group metals and other minerals and the strong rand resulted in gold being reduced in significance as a source of economic strength. Despite this, gold remains a strategic mineral. Many gold mines have closed and the Reef has been transformed into a “yellow hills” city. The treasure hidden away in these yellow hills is a vital cog of the second gold revolution in South Africa.
Enough of the historical doze. Undoubtedly, the performance of gold in the market has been the highlight of 2011. The gold price picked above platinum at historical high levels and the gold sector was given a new impetus. Gold mining companies, which for years had been closing down operations and retrencing, creating ghost towns and committing exploration resources to other parts of the continent, suddenly have a new drive for expansion. Gold companies are now back amongst their peers in the mergers and acquisitions space and they are developing new projects.
Side by side with this, another silent gold rush is taking place: the gold dumps reclamation revolution. Operations such as Ergo in Brakpan, east of Johannesburg, are reported to be processing billions of tons of gold. The yellow hills of Johannesburg have become dependable results where the surplus resources of the gold rush were stored and are now being processed. The financial meltdown of 2007 to 2009 also resulted in gold bullion becoming the safest and most sought after form of currency. The era of gold is back.
The influence of gold permeates all aspects of society. The most coverted award for any sport or other competitive activities is gold metals. Who can forget the spectacular 2010 FIFA World Cup Final, which was played on the Reef inside the majestic Soccer City (FNB Stadium)? At the end of that spectacle, the Spanish captain, Ike Kasilas, lifted the golden world cup trophy, signifying that gold had come full circle: from Johannesburg to Johannesburg!
The outlook for 2012 is therefore one of positive expectation for the mining industry in general and the gold sector in particular. This positive outlook demands of all stakeholders to ensure a healthy, investor friendly, safe, rewarding and prosperous industry in which the Department of Mineral Resources should play a critical role in making the environment enabling. Similarly, mining companies must be responsible to the environment, mining communities and their employees and all of us must sing in one voice and say: rise gold rise!