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Top gold producers in SA downgraded by HSBC to “sell”

by Cecilia Jamasmie | August 12, 2013 | Reprinted by permission of

South African top gold producers AngloGold Ashanti NYE:AU, Harmony Gold NYE:HMY and Sibanye Gold NYE:SBGL were downgraded to sell by HSBC, which said the lower price of the metal is cutting margins at the companies currently dealing with labour disputes.

The mining industry in Africa’s No. 1 economy failed to contain costs during a decade-long bull market in gold and it is now badly placed to manage the pressures that come from lower prices, HSBC analysts led by Johannesburg-based Derryn Maade wrote in a note released last week, reports Commodity Fundamentals.

Gold producers represented by the Chamber of Mines of South Africa (CMSA), are in dispute with South Africa’s four biggest labour unions after workers rejected a 5% raise offer.

South Africa’s two main mining sectors, platinum and gold, are under pressure from spiralling costs and weaker commodity prices. Their representatives have warned that any significant increase in wages will risk more job losses and trigger closures.

Wage negotiations are expected to run until the end of the year.

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