1) Geographical Location: World,20132) Chronicle of the event: While gold prices hit record highs during 2012,the world unfortunately experienced a sharp decline in 2013.
Despite the factthat gold demand was relatively strong, supportedby increase in demand for jewelry, especially from India and China.3) Breakdown of the event: Drop in gold recycling and limited production growth werethe main contributors to the decrease in supply of the preciousmetal during 2013. Building a new mine requires significant capitalin startup stage and is a demanding, 5 to 10-year process. Reductions in explorations have resulted in fewer new discoveries, which impactson the replacement of gold reserves and resources by mining companies.4) Consequence of the event: With gold reserves slowly depleting, the cost ofreplacing gold mines is increasing and the effects ofageing infrastructure are becoming noticeable.
However, whereplanned development has taken place, mining companies have been able to dealwith these issues. 5) Policy remedy: The SouthAfrican gold sector offers a hedgeagainst gold price fluctuation. But mining companies need to be moreflexible and be able to adjust cost structures quickly in response to thefluctuating gold price. By deliveringconsistent returns and showing value generation, the gold sector will eventually restore investorconfidence.
This has to be further supported by the sensible use of availablefunds, conservative capital expenditure outlays and an increased focus on freecash flow generation.Governments also have a role to play in partnering with mining companies and providing a level ofcertainty about regulatory compliance, tax regimes, the administration of mining licenses and social requirements. Comment: Productivity levels affect the supply of commodities in the market. By understanding its role and engagementwith employers, productivity levels can improve and costs can be reduced. Thiswill attract producers for increasing the supply with an increase in demand