The sustained upward trend in the price continues to positively impact brownfield gold operations, with elevated gold prices potentially even justifying the reopening of sites previously considered marginal or uneconomical, highlights financial services company Standard Bank South Africa Business and Commercial Banking (BCB) mining head Abe Andries.

However, he says most South African gold producers still face significant operational cost pressures owing to the challenges of deep-level mining, with only a small number of shallower operations enjoying relative cost advantages.

Further, the gold sector continues to grapple with challenges stemming from unregulated and criminal activities and, while not unique to gold, these issues are particularly pronounced and pose a significant threat to potential revenue streams and undermine the long-term sustainability of any business connected to gold, adds Andries.

On the technical front, he says South Africa remains well-positioned as the country is endowed with highly skilled professionals and extensive expertise capable of navigating the complexities and geological distributions associated with gold orebodies.

However, while gold mining remains a labour-intensive operation, demanding highly skilled personnel to work in deeper mines in pursuit of high-quality gold deposits, Andries says deeper depths reduce the effective operating time of personnel owing to extended travel to the face, thereby introducing additional operational risks.

Andries adds that energy security remains a critical determinant of mining success and he highlights the improved stability at State-owned power utility Eskom, combined with the growing adoption of a diversified energy mix as an effective way of providing meaningful mitigation and fully leveraging the benefits of the current high gold-price environment.

In terms of the bank’s role, he says that despite remaining encouraged by the strong performance of the gold price, Standard Bank adopts a holistic view of the entire gold value chain and conducts thorough assessments of counterparties and operators.

“To effectively address these complexities, our team of specialists evaluates every dimension of a transaction, integrating both technical and financial analyses to ensure well-informed and sound decision-making,” highlights Andries.

In addition, he says that environmental, social and governance (ESG) considerations form an integral part of Standard Bank’s assessment framework, particularly when evaluating mine owners and their operations.



Looking ahead, Andries explains that while the retreatment of historic gold tailings remains challenging, it is still achievable. He anticipates the entry of new participants into this segment following numerous recent successes in these activities.

Further, he says that existing gold mines are expected to continue operating for some time, which may prompt the reopening of previously closed mining levels to keep up with demand.