Diamonds shine but gold dulls

Stats SA figures show manganese ore and diamonds were the star performers of 2017, writes Alf James

The 2017 Mining Charter published by government in June has seen its fair share of debate, opening intense discussions on the industry’s future.

Outside of this policy debate, Stats SA recently published figures showing how the industry performed in 2016 and 2017. South African mining did not enjoy a good year in 2016, according to the Stats SA figures, with the industry declining by 4%, the largest annual fall in production since the global recession of 2009.

Only one mineral managed to keep its head above water: diamond production recorded positive growth of just under 1%. All other minerals found themselves in negative territory in 2016, with copper the worst performer, recording a 16% fall in production.

The industry fared much better in 2017 following higher mineral prices and increased global demand. Production was up by 4% last year, bringing relief to the embattled industry.

Stats SA reports manganese ore was the star of 2017, with production of the metal rising by 32%. Diamond mining had an even better 2017, placing it as the second most successful mineral after manganese (up 17%). Rising demand in China for steel was the main driver behind the rise in manganese production. Chromium and iron ore, two other minerals used in the production of steel (in the case of chromium, stainless steel), were the third and fourth best performing minerals in 2017.

Stats SA has previously highlighted the extent to which gold mining has lost ground over the past three decades. The precious metal continued its production decline, slipping by 3.7% in 2017. The annual production index for gold is 46% lower than it was in 2007.

In fact, South African gold production has experienced only four years of positive growth since 1990 — in 1992, 1993, 2002 and 2013. All other years saw a decline, with the largest annual fall occurring in 2008 (-16%).

Employment has been the obvious victim. Just over two in every three gold mining jobs in 1995 no longer exist. Gold mining employed about 380,000 people in 1995, according to Stats SA’s Environmental Economic Accounts Compendium report, falling to about 119,000 people in 2014.

Despite the fall in production, gold still finds itself in the top three in terms of the value of sales. South African mineral sales were dominated by coal (28%) and platinum group metals (21%) in 2017, followed by gold (15%). However, Stats SA says that with estimates that SA has 39 years of accessible gold reserves remaining, it remains to be seen how long gold will hold on to this position.

Mining is still an important player in SA’s economy. The industry contributes R8 for every R100 produced by the national economy and employs one in every 40 working individuals (or 2.5% of the entire workforce). Stats SA explains that mining is the largest industry in four of SA’s nine provinces: North West, Limpopo, Mpumalanga and Northern Cape. Mining contributed R33 for every R100 produced by North West’s economy in 2015 and the industry employed one in every six working individuals (or 16% of the provincial workforce).

Efforts to ensure a sustained growth path are vital to the livelihoods of communities that depend on this industry.