SA mining stages a slight recovery
SA’s mining industry staged a slight recovery in 2016, but the sector was smaller than in 1994, with many domestic issues weighing heavily, most notably the sharp drop in gold production, Chamber of Mines CEO Roger Baxter said.
Speaking at the chamber’s annual general meeting, which was to be addressed by Mineral Resources Minister Mosebenzi Zwane, who did not attend, Baxter and departing chamber president Mike Teke said there were still considerable headwinds for the industry, with regulatory and policy uncertainty the most urgent factor to be resolved.
Teke also said the measurement of transformation in the sector should be revisited because it had been hijacked for political gain.
The chamber, which suspended a legal process to seek a declaratory order on whether past empowerment deals should be counted towards empowerment credits, has not heard from the department for two months on which changes were made to the draft third
iteration of the Mining Charter, which the chamber has vehemently condemned.
Zwane said last week finalisation and publication of the charter was imminent.
The impasse between the chamber and the Mineral Resources Department over past empowerment deals, the charter and amendments to the Mineral and Petroleum Act — in the works since 2012 — had contributed to a lack of large investments in new projects.
The R90bn spent in 2016 had largely gone towards sustaining capital rather than new projects, Baxter said.
“The South African mining industry in 2016 is smaller than it was in 1994. The reason is that gold production then was just over 500 tonnes. Last year, it was below 150 tonnes.” Baxter said that during the same period coal, platinum, manganese, chrome and “unfortunately, more recently, the illegal mining of chrome”, had shown growth.
After making an aggregate loss of more than R30bn in 2015, the mining sector generated R304bn towards SA’s GDP, representing 7.4% of SA’s economy in 2016, rising from R286m and 7.1% the previous year. Between 2001 and 2008, real investment in the industry grew at more than 12% a year, but has subsequently fallen to 0.5% a year during the past two years.
Pension and government funds, including all race groups, owned more of SA’s mining than the industry, Teke said. “None of these companies are owned and controlled by the mining magnates of old, who exist only in the minds of those who are trying to sell, for mischievous ends, the notion of white monopoly capital,” he said.
The Mining Charter stipulates that mining companies must be at least 26% blackowned by 2014, but Teke said that target was “conceptualised in a different era. We do need to be thinking more creatively about how our economy, and our industry in particular, can and should be transformed.”