Gold output in South Africa, the world's biggest producer, extended its decline in the first quarter, falling 12.8 percent year-on-year, the Chamber of Mines said on Monday. Production fell to 73.8 tonnes (2.37 million ounces) during the first three months of 2005 from 84.6 tonnes in the same period last year, mainly as a strong rand made some shafts uneconomical, it said. "In a similar vein to 2004 the South African gold mining sector remained under pressure due to falling rand revenues and rising production costs," a statement from the chamber, an industry group, said.
In late March, the country's fourth largest gold producer DRDGOLD closed its loss-making North West mines, which been hard hit by the buoyant rand, slashing output by a third.
Harmony Gold, the world's sixth biggest gold producer, has also struggled with loss-making mines and posted its seventh consecutive quarterly headline loss for the three months to March.
South Africa's other main gold producers are AngloGold Ashanti, which ranks second in the world, and fourth place Gold Fields Ltd.
The domestic gold price in the first quarter fell 7.7 percent year-on-year to 82,206 rand per kg while total production costs rose 5.2 percent to 88,012 rand/kg, the chamber said. Since then the local gold price has recovered to around 88,000 rand due to a weakening of the rand. The weaker rand has boosted gold mining shares in recent weeks, including 3.9 percent on Monday by 1410 GMT.
Adding to the pressure have been higher costs for water, steel, rail tariffs and wages, the chamber added.
The chamber also revised downwards 2004 gold output figures, saying production for the year was 342 tonnes, not the 342.7 tonnes previously reported, meaning production fell 9 percent instead of 8.8 percent. Gold production last year was the weakest since 1931.
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