Figures were produced before the former body showing that the cost of administration expenses per ton milled was in 1914, in pence per ton, 5-7 pence and in 1919, 6-3 pence. It came to the conclusion that
the
group organization, under which a staff of experts in various branches,
such as mining, mechanical and electrical engineering, metallurgy,
etc., is maintained and placed at the disposal of the mines of the
group, should obviously be advantageous to the individual mines. It
tends to make available to all the mines of the group the services of
those men who have shown themselves most capable in their profession,
and, if central control is not overdone, must be a more efficient and
economic system than the maintenance of a similar but probably
inferior staff by each mine. The controlling firm has, it is true, the
benefit of the advice of these experts on matters in which the mines,
who jointly pay their salaries, have no concern, but no serious
objection can be taken to this.
It also expressly stated that, from the figures submitted, 'which show that the total administrative cost is about 6d. per
ton, and bearing in mind that certain administrative expenditure is
unavoidable, it is obvious that the economies, if any, which remain to
be effected in the direction indicated [by the critics], cannot
possibly materially affect the position of the low grade mines'. The
later Commission published figures showing that the 'head office costs'
per ton milled were 3-5 pence in 1928 and in 1948 (when prices
were of course much higher generally than in 1928) the cost per ton was
4-6 pence. It commented that
the
increase in costs between 1928 and 1948 seems to be due to an increase
in services rendered as well as to the general increase in costs or
expenses, especially in the form of salaries, connected with
administration, technical advice, etc. The necessity of incurring these
costs has evidently grown with the development of the 'group system' on
the Rand and it is doubtful whether these costs could be much reduced
without lowering the efficiency of management and operation in each
individual mine. Here again a reduction of 20 per cent in these costs
would reduce 'working cost' per ton milled only slightly.5
5 A renewed investigation was undertaken by the Transvaal and Orange Free State Chamber of Mines in 1959:
'The
cost of a group's services to a mine is met by an annual administration
fee and in most cases some additional charges based on the value of
stores purchased and charged to working costs, and charges on items of
a capital nature when ordered through the group and erected under its
direction. Figures taken out by the Chamber of Mines for the year
1959 show that on average, over the industry as a whole, group or head
office (including London office) charges amounted to 9-2<f. per ton
milled, or only i-6 per cent of average working costs for that year.
Clearly then this system is economical.'
'The
Organization and Management of the Gold Mining Industry in South
Africa', p. 4: a paper submitted to the Seventh Commonwealth Mining and
Metallurgical Congress (held in Johannesburg in April-May 1961) by Mr.
C. B. Anderson, president of the Transvaal and Orange Free State
Chamber of Mines.
