Falling gold prices have already forced South Africa, the world’s largest producer, to lay off 100,000 miners over the past three years. The IMF sell-off may leave only five of the country’s 19 mines still profitable, which would be bad news for a government elected on promises to tackle an unemployment rate estimated at 50 percent. The irony is that while it may be a struggling economy, South Africa isn’t a significant debtor nation. The G8’s debt-relief program may yet help turn it into one.
Tens of thousands of South African miners are set to pay a heavy price for the industrialized world’s charity. Under pressure from a bewildering array of notables ranging from Pope John Paul II to U2 singer Bono, the G8 agreed last weekend to cancel $70 billion of the $214 billion debt owed by the world’s 41 poorest nations. But the industrialized nations plan to finance the move, in part, by selling off some 10 million ounces of gold from the IMF’s reserve. That will inevitably drive down the price of gold –- which at $260 an ounce is already at a 20-year low -– and mean pink slips aplenty for South Africa’s miners.