The yellow metal hit a historic high on July 17, with spot prices at $2,482.97 per ounce, fuelled by demand from Asian investors, central banks buying bullion to diversify their reserves, and geopolitical tensions, particularly in the Middle East.
By press time on Wednesday, spot gold prices had reached $2,424.58, continuing their recent highs. Gold prices are up nearly 18% this year and are expected to remain at elevated levels through 2024.
“Economic and geopolitical uncertainty tend to be positive drivers for gold, due to its safe-haven status and ability to remain a reliable store of value. “It has low correlation with other asset classes, so can act as insurance during falling markets and times of geopolitical stress,” analysts at the world’s largest bank, JP Morgan, said in a recent note.
The expectation that interest rates in the United States could fall later this year, is also fuelling investment in gold, as investors hunt for returns.
“Many of the structural bullish drivers of a real asset like gold—including U.S. fiscal deficit concerns, central bank reserve diversification into gold, inflationary hedging and a fraying geopolitical landscape—have lifted prices to new all-time highs this year despite a stronger US dollar and higher US yields, will likely remain in place regardless of the US election outcome this autumn,” said Natasha Kaneva, the head of Global Commodities Strategy at JP Morgan.
The rally in gold prices, however, is lost on Mupane Gold, whose creditors are now pressing for liquidation, after the mine halted operations in March. At the time, e subcontractors abandoned the work site due to unpaid services, while both electricity and water supplies were disconnected due to defaulted payments by Hawks Mining.
Hawks Mining, a local company that formed a management buy-out of Mupane, acquired the mine in 2022 with hopes of revitalising its operations. However, the situation has deteriorated rapidly. The mine was closed in February this year after running into cash flow problems and the mine’s staff complement of more than 200 employees has been idling at home since then.
In April, the company management said that talks with a potential funder were ongoing and would be concluded ‘soon’.
However, last month the Botswana Mine Workers Union said that Mupane was now seeking a new funder after the initial potential investor backed off plans to rescue the mine.
The union is currently pushing the management to apply Section 25 of the Employment Act to free workers so that they can seek opportunities elsewhere. Section 25 of the Employment Act stipulates that where contracts of employment have been terminated for the purpose of reducing the size of a workforce, the employer shall, if he again seeks employees in the occupations to which those contracts are related, give priority to engagement, to such extent as is reasonably practicable, to those persons whose contracts of employment were so terminated.
The section does not apply where the employer seeks such employees more than six months immediately after the contracts in question were terminated.
Meanwhile, local firms, Top Mining Services, through its director Anthony Siwawa, and Mine Tech, which is owned by Rene Aust, have filed an application asking the High Court to issue an order for the provisional liquidation of the mine. The two creditors are reportedly owed over P50 million by the mine.
