JOHANNESBURG (Commodity Online): Once upon a time South Africa was the largest gold producer in the world. But, things have changed now it has fallen to the fourth position in the world as the mines in the country are facing severe power problems and decline in the output.

A further decline in the country's mined gold output in 2009 has now relegated the country to fourth position in the world gold production stakes. 

South Africa was the world's largest gold producer for most of the 20th century and early 21st until it lost that position to China.  Now, the latest figures also put it behind Australia and the US in global gold output.

In 2009, South Africa produced 204.9 tonnes of gold, a 5.8% decline on the 2008 production number.  The 5.8% year-on-year decline in production in 2009 was, however, not as large a fall as in 2008 when the drop was 14.5%, mostly as a result of the country's electricity crisis when power shortages early in the year forced most mines to cut production.

Nevertheless, the country's gold mining industry remains critically important to its economy. In 2009, the industry earned about $6.6 billion at the current exchange rate in foreign exchange making it the country's second largest exporter behind platinum group metals ($7.8 billion).

The gold sector employed about 159,000 workers and paid about R17 billion in salaries and wages, spent R10.3 billion on capital expenditure, paid R1.4 billion in direct tax to government, paid R506 million in dividends, procured about R3.6 billion worth of electricity and spent another R8.6 billion on the procurement of other goods and services in the economy.

In the fourth quarter of 2009, South Africa's gold production fell only by 1.8% to 51.68 tonnes when compared to the third quarter. On a year-on-year basis gold production was down by 5.4% in the fourth quarter of 2009.

While the fall in South Africa's gold output appears to be slowing, there are particular difficulties facing the country's gold miners, mainly due to the great depths at which many mines operate and declining grades in the older mining operations. 

This is also having an impact on mine safety and although the industry has made great strides in improving this, safety-related closures following mine accidents continue to have an impact.  From a mining point of view the depths at which many of the mines operate, make them difficult to work in total safety due to the unpredictability of extreme rock pressure related seismic events. The level of deaths, although it has fallen over the years, remains unacceptable although it is probably far safer to be a miner in South Africa than in say China, or in a number of countries where mining accident rates per capita employed are far greater.