Mines must return to work on April 17, urges council

SA’s mining sector must return to work at the end of the 21-day lockdown or face permanent damage having already estimated to lose a fifth of April’s production and R7bn in wages during the period.

In a communication to Minerals Council SA members on Friday as SA entered the second week of the three-week shutdown to curb the spread of the Covid-19 virus, the industry body stressed how important it was for its members to be allowed to continue mining from April 17 with all safety and mitigating protocols in place to prevent the disease.

The council’s leadership will meet mineral resources & energy minister Gwede Mantashe and department officials on Wednesday. Mining companies stocked up on face masks, sanitising fluids, gloves and other health equipment ahead of the lockdown.

The council said that “mining was fairly treated” by the department and that a number of mining, smelting, refining and export facilities have been kept open “at least to try and minimise the damage”.

Mantashe said at a briefing on Friday the department had allowed a number of companies to remain operational, but with staffing levels not exceeding half of normal numbers. He said there were three confirmed cases of infection on mines.

Gold, chrome, manganese and iron-ore mines had continued limited operations, he said.

One of the balancing acts the department and industry face is keeping employees safe while positioning mines and plants for rapid restarts once the lockdown is lifted, generating vital revenue for SA’s stalling economy.

Mining generated R350bn in export sales in 2019, accounting for a quarter of foreign exchange earnings. The industry paid the government more than R33bn in taxes and royalties, and the consequences of the shutdown are severe and could worsen as many in the mining sector are expecting an extension to the lockdown.

Data from Johns Hopkins University and BCG Analysis shows that SA’s peak infection rate is expected in June and that the lockdown could be ended between then and August.

“The economic damage of the lockdown to the country’s economy is profound,” the council said in its Friday communication. “At this stage it is not clear exactly what the government’s strategy is beyond the lockdown period and it appears we are

reaching an inflection point where the economic damage of extending the lockdown will become permanent,” it said.

The council said its estimates “suggest a 20% decline in mining production in April, with a 4.5% decline for the year as a whole, even if we have a smooth resumption on April 17”.

“This excludes the costs incurred to place operations on care and maintenance and the circa R7bn in wages paid during this lockdown period.”

A number of mining companies have spoken of paying basic wages as well as continued contributions to medical aids and pension funds, but that if the lockdown extended beyond 21 days this would have to be revisited if the majority of operations remained closed.

Mining employs 450,000 people and with hundreds of thousands more in businesses supplying goods and services to the mines and their plants.

Mantashe said there were customers in need of SA’s minerals and that his department along with the department of transport were working together to make sure the rail and ports were operational to ensure deliveries.

Big iron-ore companies such as Kumba Iron Ore, Afrimat and African Rainbow Minerals and its listed partner Assore are all exporting and operating at reduced levels. Surface operations, which are mechanised and have relatively few people, are continuing to mine and process minerals, such as Harmony Gold, Pan African Resources and, soon, DRDGold, which all re-treat tailings.

Open-cast mines, such as Anglo American Platinum’s Mogalakwena and its mechanised Mototolo underground mine, are back in limited production, while other platinum companies treat stockpiled concentrate, having suspended their underground mines.

Coal mines supplying stateowned power monopoly Eskom remain in production, while limited coal exports are leaving SA.