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Illegal gold mining in South Africa brings hope

Friday - 11/9/2012, 10:06am  ET

By CARLEY PETESCH
Associated Press

ROODEPOORT, South Africa (AP) - Julius Mthembu's mud-spattered face lit up as he held a tin pan and pointed to the glimmering flecks of hope lying among sand and water: gold. The find meant the 48-year-old would eat that week.

"It's difficult. I don't make a lot of money here," Mthembu said as beads of sweat stood out on his forehead. The Mozambican and his countryman Santos Viriato have been gathering dirt from the shuttered Durban Deep mine and sifting it for leftover gold for two months.

South Africa, once the world's foremost gold producer, has been experiencing a labor upheaval in its critical mining sector, and Mthembu and Viriato are emblematic of both the troubles and the hope that persists, with not only gold but also platinum, chrome and other minerals remaining untapped.

A violent six-week strike at a Lonmin PLC platinum mine northwest of Johannesburg ended Sept. 18 after a pay hike of as much as 22 percent was given to the miners. The deal inspired thousands of workers in other mines to lay down their tools to seek higher wages. Mthembu and Viriato said they had been contract workers at another Lonmin mine _ mostly working on pipes through the mines _ and that they were laid off when the company they worked for lost money during the strike.

They wound up near a highway outside Johannesburg, sifting through the soil around the shuttered gold mine and hoping to strike it rich or at least eke out a living. Dozens of other men and women were also participating in illegal mining, working in makeshift operations in a sort of gold rush not far from the skyscrapers and highways of Johannesburg, still marked by towering mustard-colored mine dumps, a leftover from the city's heyday in mining.

"We want money and we have no choice," Viriato said.

They sift for gold by dumping soil into a plastic bin with holes punched in the bottom, pour water in and shake the bin, allowing the wet soil to fall onto a chute made of boards and covered by plastic tarps and bath towels. After dumping a bunch of buckets into the contraption that empties into a muddy creek, the men wring the towels out into three large buckets and then pan whatever comes out.

Another half-dozen such operations are nearby. Closer to Main Reef Road, women break up rocks and grind them between stones and concrete to reduce them to powder to be later panned for gold. The activity takes place in many other parts of South Africa, mostly around mines that were shuttered because of lack of productivity, and is fueled by rising gold prices that these days stand at around $1,700 per ounce.

"There are 6,000 abandoned mines in the country and I think the majority of them still have ore that would be economical (to extract) at today's prices," said Peter Major, a mining expert at Cadiz, a financial services group. "The problem is getting the capital to reopen them."

The illegal mining provides a chance at income for unemployed South Africans and immigrants. But in the long term the activity will make it harder to attract a legitimate mining company to an abandoned site because some of the more easily accessible minerals will have been removed by the illegal operations, Major said.

Gold was discovered here in 1886 and it helped fuel the creation and growth of Johannesburg, known in the Zulu language as Egoli, meaning "the place of gold." South Africa produced nearly 70 percent of the world's gold in the 1970s. Production has been falling and South Africa is currently the world's No. 5 producer, according to the government. With strikes having affected not just platinum mines but gold mines too, gold companies are trying to keep their footing.

Major said 500,000 people were working in gold mines in 1990, with the official number now 150,000. Some of those who lost their jobs are certainly doing illegal gold mining, he said.

Buyers often come to the ad hoc operations to weigh and purchase gold. Miners say they also sometimes sell gold within their squatter camps. Mthembu said he melts all his gold particles together and sells it at the end of the week.

Zingaphi Jakuja, spokeswoman for the South African Department of Mineral Resources, said the ministry is collaborating with law enforcement agencies to combat illegal mining "as the activities are generally fuelled by complex criminal activities."

Illegal miners are generally undeterred by the threat of arrest.

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