Gold sale could wreck African economies

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The Independent Online
ZAMILE MBEWU has a mobile phone, drives a white Volkswagen and quotes the gold price. "$259 per ounce. It is a new 20-year low," said Mr Mbewu. He is not, as might appear, a city slicker, but a 39-year-old redundant South African gold miner.

All over Africa, tens of thousands more miners' jobs will be lost if the International Monetary Fund, as proposed, subsidises Third World debt relief by selling gold reserves - a move which would further weaken confidence in the commodity.

Of the world's 41 Heavily Indebted Poor Countries (HIPC) - which debt relief are supposed to help - 33 are African gold producers. South Africa is not on the HIPC list but "why push it that way?" asks a policy analyst for Save The Children, one of many charities arguing that the "poverty element" has not been sufficiently considered in the debt debate.

South African unemployment stands at 40 per cent and, in the slump so far, 100,000 gold miners have lost their jobs in three years. Mr Mbewu became accustomed to watching the dollar-per-ounce price soon after he was recruited. At the time, gold was soaring - it reached $674 in 1980. But 18 years and 10 months after being brought to Welkom in the Goldfields area of the Free State, Mr Mbewu was made redundant on 31 October 1997.

Gold had fallen to about $300. Now, thanks in part to Britain's decision last month to sell half its reserves, it is even lower. "It just takes a few months after a price crisis for people to be laid off," said Mr Mbewu. His payoff was 26,000 rands (pounds 2,600), or two weeks' money for every year served.

"The mining companies brought us here, then they signed us off without a future. When you are on the mines you have a place to live, a medical aid scheme, hospitals and schools," said Mr Mbewu, who is married and has two children. Now he works as a warehouse foreman in Thabong, the sprawling workers' township relentlessly dusted with sand from the verdigris- coloured slag heaps. Many of his friends live in Chris Hani Park, a squatter camp of maybe 3,000 shacks with shared standpipes and no electricity.

Yet the bleakness of Welkom, scene of a gold rush as recently as the 1950s, is moderate in comparison with other African countries. Save The Children has taken a special interest in Burkina Faso, a West African HIPC ranked 172nd out of 175 countries in the United Nations development index. Here, the charity claims, children as young as six scramble among adults for work in dangerous and cyanide-laced conditions.

Rita Bhatia, Save The Children's policy analyst in London, said: "Child labour is a direct consequence of poverty, which in turn is aggravated by debt. This year is the 10th anniversary of the UN convention on the rights of the child. Yet in the debt debate, there is not enough focus on how much countries will have to spend on alleviating poverty."

Bodies such as Britain's Department for International Development (DFID) say that "gold sales will be carried out in an orderly and prudent way so as to have a minimum impact on the market price". But many development economists, analysts, mining unions and even some mine owners argue that the damage caused by a loss of confidence in gold would far outweigh the benefits of debt relief.