Mining company workers in Ghana – Africa’s biggest gold producer – are worried about the stability of their jobs. With decreased global mining output and squeezed profit margins, a lot of mining firms last year had repeatedly cut costs and jobs.
In August 2014, AngloGold Ashanti closed mines and laid off workers</a> in order to cut $500 million from its operational costs.
The decrease in global mining output last year was due to the decision of most mining companies to stop spending. Bullion Vault reported that lower prices for gold in 2014 forced producers to cut exploration spending in order to boost profit margins.
This year, the outlook for gold mining isn’t healthy. The news about The Fed’s possible move to increase interest rates in mid 2015, and the recovering U.S. economy aren’t helping with the investors’ overall sentiment toward the precious yellow metal. Sure, there’s an ongoing rally for gold now but precious metal experts aren’t sure when it will continue.
According to Fool, some of the factors that may be playing catalysts for gold’s current rise are the oil price plunge in the last 6 months, and the possibility of the announcement of Europe’s very own quantitative easing program by European Central Bank president Mario Draghi. However, whether or not those catalysts can serve as solid bases for gold’s prices to spike out of the $1,200 per ounce mark is yet to be seen.
The technology for mining out gold still hasn’t advanced much, except for AngloGold Ashanti’s Reef Boring technique that allows the company to extract more gold from previously-mined sites and therefore increasing its yearly output and saving on costs. Lots of mining firms are struggling to find ways on how to counter the possible issue of peak gold, as well as decrease their operational expenses through new technology.
The process of extracting and purifying ores by most companies is still an expensive operation because huge rocks that are mined out of Earth, which takes a lot of time and power to process, only yield a small amount of gold.
The deteriorating numbers of easy-to-mine gold, overall investor sentiment to gold’s future prices, and the lack of new technology to increase output and decreases operational expenses are the main reasons why Ghana workers fear for the future of their jobs.
There’s a rally in gold prices now that will help mining companies in the next few weeks or months but the issue at hand is work stability. In Ghana, not every field worker gets a constant amount of salary every day. Workers in most areas get paid depending on the amount of soil they bring for gold processing.