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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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This South African Gold Miner Just Declared War On Illegal Miners

Small-scale mining is a growing issue across Africa. With regulators in Ghana this week making their first moves to shut down artisanal operations — part of an emerging campaign against environmental damage.

And in Africa’s top gold-producing nation, South Africa, things are getting even more serious. With one of the country’s top miners unveiling a never-before attempted strategy to deal with informal and illegal gold mining at its operations.

That’s Sibanye Gold. Which said over the weekend it is moving to completely drive out small-scale miners from its South African mines.

Sibanye’s management said they are setting a goal to have all illegal miners cleared out by next January. Making the company the first-ever in South Africa to implement such a “zero tolerance” policy.

This a critical gauntlet being thrown down. With illegal mining being a rampant problem across South Africa’s gold sector — often carried out by well-organized and well-funded gangs, who rob gold ore from active shafts at big mines.

To get rid of them, Sibanye is dedicating significant resources. With a budget of 200 million rand ($15 million) set aside by management for programs like rewarding whistleblowers — and installing high-tech check points at mine entrances to keep out illegal miners. Related: The Bullish Case For Oil Is Fading Fast

The move is potentially a big one economically for Sibanye. The company hasn’t released estimates of its specific losses from illegal mining — but a recent study from the South African Chamber of Mines pegged losses from stolen gold for the mining sector as a whole at a stunning $1.5 billion.

That suggests a successful campaign could make a huge difference to Sibanye’s bottom line. Which in turn could help revitalize operations for the company, and perhaps other South African miners who might follow Sibanye’s example.

The move also shows just how desperate South Africa’s miners are getting in trying to restore profitability. Watch to see how effective Sibanye’s fast-unfolding campaign will be — and if this can indeed give a lift to the company, and the wider gold mining sector.

Here’s to going clean.

By Dave Forest

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