South Africa�s gold production for 2006 declined by 7.5 per cent to 275.11 tonnes, said the Chamber of Mines. This is the country�s lowest level of gold production since the strike in 1922 reduced production to 218.03 tonnes, it added.

Gold output during the fourth quarter fell by 3.1 per cent to 68.11 tonnes compared to the third quarter, and by 9.3 per cent on a year-on-year basis.

Increasing processing capacity failed to offset a fall in ore grades, which declined by 2.7 per cent in the quarter and by 9.3 per cent during the year, hence the decrease in production.

The falling ore grades may be partly due to the 41.7 per cent increase in the gold price to an average of $19,400 per kg, which in turn allowed mining companies to mine lower grade ores that had previously been uneconomic to mine, the Chamber of Mines said.