A Golden Bonanza

Like the U.S. and The Netherlands, South Africa has been placed under a total embargo by oil-exporting Arab nations. Unlike any other country, South Africa has not just survived the oil squeeze but is basking in a golden glow of prosperity because of it. Reason: the rising prices of the Arabs' black gold, oil, have helped to set off an even bigger rise in the price of the real yellow gold that South Africa mines in greater quantity than any other nation.

The Arabs imposed the oil embargo on South Africa partly in order to win favor with Black African nations that detest South Africa's apartheid policies, partly because they were angered by the fact that South Africa permitted its Jewish citizens to send money to Israel during the Yom Kippur War. The direct effect of the embargo has been minimal. Endowed by nature with rich coal deposits, South Africa derives only 20% of its energy from oil, v. 46% for the U.S. Even so, it thoughtfully stockpiled oil in advance. Buried deep in otherwise unused Transvaal coal mines is an undisclosed number of barrels of oil.

The indirect effects have been much more important. The Arabs have been using some of their oil revenues to buy gold. Inflation, fueled largely by oil price increases, has caused other investors around the world to doubt the value of paper money, and they too have been stampeding to buy gold. The price of gold on the world's free markets recently has soared as high as $178 an ounce, more than quadruple the "official" price, and South Africa's gold reefs have produced almost half the gold mined in the world since the dawn of time.

Powder Keg. As a result of the price runup, played-out mines are coming back to life. A young Johannesburg businessman named Desmond Fisher has bought a mine that has not been active for 13 years, and intends to bring it back into production by year's end at a cost of $1 million. At one Transvaal mine closed for a decade, 25 kilograms of gold worth about $145,000 at present prices have been produced in the past two months solely by reworking old tailings. The Grootvlei mine, which appeared to be near the end of its productive life several years ago, has boosted its profitable reserves by 280%.

Taxes on the gold producers are expected to net the government $328 million this year, just about double 1973 receipts. How to spend the new wealth has become a pleasant issue in the campaign for the parliamentary elections on April 24. The ruling Nationalist Party pledges to consider improving the country's schools, hospitals and food subsidies; it also hints at income tax cuts. The opposition Progressive Party would use the money instead to build up the tribal homelands where blacks are being relocated.

Blacks already are benefiting somewhat from the golden bonanza. Some 350,000 black miners work from 3,000 ft. to more than 12,000 ft. underground, sweat pouring off their bodies because of high temperatures and humidity. Last April the Chamber of Mines raised their minimum wages 30%, and in December it decreed a further 10% raise.

Even so, minimum wages for blacks in the gold mines now total only $60 a month in cash and $33 in food and shelter. Wages of some workers in the mines have risen more sharply, a trend that last year touched off riots in one mine that ended in the death of twelve blacks. The riots serve as a grim reminder that for all its golden bonanza, the South African economy sits on a powder keg of racial unrest caused by apartheid.

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