Miningmx writes that the medium-term feasibility of SA’s remaining deep level gold mines has been thrown into doubt by cost headwinds.  These include the latest three-year wage agreements and the possibility Eskom could hike electricity costs by 15% a year.  

“Given the current macro environment, with further headwinds facing the industry on the back of Eskom’s push for a 15% electricity price hike, we are of the view that the medium-term sustainability of mining companies offering above-inflation increases are at risk,” said Yatish Chowthee, an analyst for Australian bank Macquarie.  Margin erosion was therefore likely notwithstanding the weakening of the rand against the dollar in the second half of this year and the rally in the US dollar gold price.  On back of the wage and Eskom (potentially) headwinds, Chowthee reiterated the bank’s “sector thesis of steering clear of deep level assets.”  Chowthee’s comments came as Sibanye-Stillwater prepared for a strike by the Association of Mineworkers & Construction Union (Amcu) on Wednesday.  Meantime, members of the National Union of Mineworkers downed tools at Gold Fields’ South Deep more than a fortnight ago over looming job cuts.  These strike developments are said to present significant social risks ahead of Christmas.

• Read the full original report by David McKay at Miningmx

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