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The price of gold, of which South Africa was the top producer from 1906 to last year, when it was dethroned by China, passed the 1,000 dollar-an-ounce mark for the first time on Thursday.

"The higher prices should help the economy ... but we can't make full use of it because of the energy crisis," said Mike Schussler, an economist with investment firm T-Sec.

State power utility Eskom, its ageing infrastructure incapable of keeping up with the demands of a booming economy, started imposing intermittent savings cuts from late last year, paralysing the mining industry for five days in January.

Subsequently, it imposed a quota of 90 percent of historic use on mines in the country, recently lifted to 95 percent, to keep the country afloat while building new electricity infrastructure.

Gold production plummeted 16.5 percent year-on-year in January.

Reliable electricity supply is crucial to ensuring safe working conditions underground, including proper ventilation and water drainage.

Savings were thus accrued by reducing the use of production equipment.

"The impact (of the power rationing) is not 10 percent of production, it can be 20 percent," said Chamber of Mines chief economist Roger Baxter.

Mining group Gold Fields indicated in February the energy crisis could cut long-term production by up to a fifth and may force it to shed nearly 7,000 jobs.

Company spokesman Andrew Davidson said Friday the higher gold price was welcome.

"Obviously any increase of the gold price is beneficial for the gold producers ... it is a great help."

But, "if we are not receiving enough power, we will have to close some shafts, therefore only more power will assist us to minimize job losses."

Added Baxter: "If we could produce more, it (the higher price) would be good for exports, for employment and the economy in general.

"This is an opportunity lost for South Africa."

This was all the more depressing, noted the analysts, as a gold price hike would ordinarily have been just what South Africa needed to lift it out of a patch of economy slowdown.

Economic growth slowed last year to 5.1 percent from 5.4 percent the previous year, and the government in February cut its prediction for 2008 from five percent to four percent.

According to Baxter, gold price rises in 2005 and 2006 helped finance the restoration of ageing

wells and the opening of new ones, enabling mines to increase output.

Photo: AFP

Vocabulary

to cripple, v: to make something work less well

to dethrone, v: to be better than the best; to make someone stop being number one

utility, n: public service like water or electricity supply

to boom, v: to get better quickly; to grow or improve a lot in a short time

to paralyse, v: to make unable to work

to keep afloat, v: to enable something to continue working

crucial, adj: very important; necessary

to shed, v: to get rid of; to give away

shaft, n: tunnel-like hole that goes underground and is part of a mine

patch, n: short, limited period of time

Questions

1. How much of today's gold has been produced by South Africa?

a. 5%

b. 30%

c. 70%

d. 90%

2. Why can't South Africa produce that much gold any more?

a. energy crisis

b. lack of demand

c. depletion of stock

d. environmental concerns

3. Why is that a problem?

a. Computers stop running.

b. Workers might lose their job.

c. Women will have no jewellery.

d. Dentists can't fix teeth any longer.

4. Who produces most of the gold now?

a. China

b. America

c. Venezuela

d. Switzerland

5. Which of the following words describes South Africa's current economic situation?

a. boom

b. recession

c. slowdown

d. depression

Synonyms

Which of the following words or phrases replace the ones from the passage best?

1. precious

a. rare

b. shiny

c. plentiful

d. valuable

2. hamper

a. stop

b. hinder

c. enable

d. increase

3. intermittent

a. drastic

b. minute

c. irregular

d. compulsory

4. plummet

a. drop

b. slow

c. grow

d. explode

5. accrue

a. waste

b. spend

c. prevent

d. increase

KEY

Questions          1.  b, 2. a, 3. b, 4. a, 5. c

Synonyms          1. d, 2. b, 3. c, 4. a, 5. d

By Ajarn Horst Baelz