Blame mining crisis on ‘policy, regulations, relentless march of costs’

The Minerals Council (MC) yesterday described the SA mining industry as having reached “a crisis state”.

Reacting to massive impending job cuts at Impala Platinum Mines and Gold Fields’ South Deep operation, MC spokesperson Charmane Russell said it was “clear that the South African mining industry has fared far worse than its international competitors”.

Gold Fields has announced its intention to cut 1 560 permanent and contractor jobs at its South Deep operation. Recently, Impala Platinum Mines (Implats) said it would cut 13 000 jobs over two years.

Russell said the country had forfeited its mining potential over the past two decades.

“SA needs a stable, predictable and competitive mineral policy and regulatory environment.

“Another factor eroding the competitiveness was the upward relentless march of costs.

“Over the past seven years electricity prices have trebled with higher steel prices also impacting.”

INFO

Behind the mining challenges, MC said some of the key areas included: 

• Real mining Growth Domestic Product (GDP) in 2017 having reached 3.4% – smaller than it was in 1994, which meant the industry had shrunk. In the same period the financial services sector’s real GDP grew by 170%.
• The relative share of mining had also declined from 14.7% of the GDP in 1994 to the current 7% level. Mining GDP even shrank during the 2001-2008 commodity super cycle.
• Despite recent improving global commodity conditions and a booming global mining sector over the past five years, real net investment in SA mining has declined.
• In five years, more than 70 000 direct mining jobs have been lost and many suppliers have been stagnant.
• From 2013 to 2017, real net capital formation in mining declined by more than 50%. Companies are not even covering their annual depreciation.

– brians@citizen.co.za

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