South Africa Imports $1 Billion of Unwrought Gold to Meet Global Demand
Wednesday, 15 May 2013
Gold dropped $6.00 or -0.42% yesterday to $1,425.40/oz and silver finished – 1.02%.
On Tuesday 14th May, workers at Lonmin PLC, the world’s No. 3 platinum producer in South Africa began a wildcat strike. This caused immediate disruption of all mine production and led to concerns that South Africa was yet again to endure violence and disruption in its mining industry.
Both mining production and output in South Africa has suffered since 34 workers were shot dead by police on August 16th last year.
The disruption to the South African mining industry has led to a shortage in raw materials for the refining and minting of gold bars and coins.
An interesting report by David Yanofsky at QUARTZ sheds some light on the implications of this shortage.
Yanofsky found that South Africa’s $402 million trade surplus with the United States in January had turned into a $689 million deficit by March with the $1.1 billion swing due to unusual shipments of unwrought gold from the US to South Africa in February and March.
Unwrought gold is impure gold created from scrap which needs further processing, mainly refining, before it can be used for manufacture of other articles.