South Africa's struggling gold mines are about to enter their most difficult wage negotiations in years. The outcome could force producers to abandon the country or close down altogether.
A geological quirk has bequeathed South Africa the most fabulously productive vein of gold discovered anywhere on the planet - but deep-level mining is also a labour-intensive industry.
Around half a million men descend daily into the depths of the Earth, as far as four kilometres down in some of the older mines that date back to early last century.
It's also one of the world's most dangerous jobs. Temperatures at depths soar to 50¿C, a level of heat Emiratis will understand better than most. The surrounding rock crushes the tunnels from all directions, much like the sea does a submarine at the bottom of the sea.
At times, a weak strand of rock gives way with explosive force, a phenomenon known as "rock burst". It can happen from above, below or the side of a tunnel, destroying anything in its path.
Rock bursts are the improvised explosive devices of mining, a source of constant fear to the men toiling for gold. Since mining began in the late 1800s, more than 70,000 men are estimated to have perished in South Africa's mines. No wonder then, that unions are demanding an ever larger share of the spoils.
The biggest mine labour organisation, the National Union of Mineworkers, made it clear that it is in no mood to bargain. It stunned the industry a few weeks ago when it said it would seek a minimum monthly wage of 7,000 rand (Dh2,570) from the current 4,700 rand, a rise of 60 per cent. Last year increases ranged somewhere between 7 and 15 per cent.
"We can't continue giving double-digit increases when productivity is declining," Nick Holland, the chief executive of Gold Fields, the country's second largest producer and the world's eighth biggest said at a recent briefing.
"That's not sustainable. Everybody knows that. All we are doing is hastening the end of the industry. You can't expect people to keep running businesses at losses. The mining industry has to be restructured."
South Africa has produced about 40 per cent of all the gold ever mined, but output is now shrinking at 7 per cent a year, and the trend is accelerating. This is in spite of at least a further 47,000 tonnes of unmined gold in the ground, or a global share of 12.8 per cent, according to the US Geological Survey.
The problem is not the lack of ore in the ground; it's the cost of getting it to the surface. Ten years ago, when the price of bullion was below US$300 an ounce, most producers were comfortably profitable. But now, even as it sells for about $1,400 an ounce, many are being pushed into the red. It's now cheaper to mine just about anywhere else in the world. China, Australia, the United States and Russia now edge out South Africa as the world's largest producers.
One reason for this is the price of labour in South Africa. The industry average puts wages at almost 40 per cent of mining costs, according to figures by the Johannesburg office of PricewaterhouseCoopers, the accountancy firm, but they can be as high as 60 per cent of operational expenses for individual mines.
In response, some firms are looking to exit the country. Gold Fields has disposed of all but one of its South African operations, to concentrate on its activities elsewhere, including elsewhere in Africa. Other mines are sure to follow. Investment analysts are wondering - and frequently urging - AngloGold Ashanti, South Africa's largest gold producer and number three in the world, to cut loose its local mines in favour of cheaper operations elsewhere. So far, the company has resisted and says it is developing technology to make its mines more productive.
As it happens, the productivity of mineworkers is something of an industry obsession - seen as key to rescuing the industry. If more grams of gold could be produced per shift, the argument goes, mines could afford to pay higher wages and return to profitability.
Roger Dixon, an old mining hand and chairman of SRK, a specialist engineering firm in Johannesburg, scoffs at the idea of squeezing more out of the men underground. Due to the age of the mines, workers have to travel, often on foot, for kilometres through the maze of tunnels to reach work stations.
"A miner works an eight and a half hour shift, with a couple of hours overtime," he says.
"He spends three or four hours walking. How is he supposed to increase productivity? Impossible. It's not the work he is doing, it's the time he has to do it in."
Some mines are considering introducing 12-hour shifts to increase the time men have at the workface but given the desert-like temperatures, this would push human endurance to the limit.
Others are holding out the hope that gold mining will have its own "fracking" moment - an allusion to how horizontal drilling and shale-bed fracturing have achieved a stunning resurgence in American oil production.
This has in fact been tried. Engineers have attempted to wrest gold from the ground by leaching acid into the gold seam, in the hopes of dissolving it and allowing them to pump it out as a sludge, not unlike oil retrieval. The idea failed.
The unions know that until a viable technology comes along to replace labour, they are in a position of power.
The mines know it too and are pouring money into research for technology solutions that will reduce their reliance on labour, even as they try stave off strike action during the current round of annual wage talks.
Even the most optimistic view is that it will be years, if ever, that technology begins to significantly replace men.
