SA’s economy needs mining more than ever. In a later interview with Finweek, Baxter said too much of the economy was being driven by the non-tradable sector; that is, consumers with access to credit. But as Stanlib economist Kevin Lings observed in what may become a famous comment, SA’s economy has to be driven by more than just shopping.
“SA is at a crossroads,” says Baxter. “Tradable export sectors are as important in balancing the country’s growth profile. Apart from the fact that it creates skilled and semi-skilled jobs and therefore balances the labour market, it also creates export revenues.
“This is revenue that can be used to service the current account deficit (somewhere around 6% of GDP presently) and makes economic growth more predictable,” he says.
In the last 10 years, the mining sector has been negatively affected by exogenous forces: Eskom power deficits, restrictions on freight, and even the damaging nationalisation debate were a function of poor Government planning, or internal politicking, rather than fundamental mining industry oversights.
Even the labour relations problems in the platinum sector last year were exacerbated by a national fever; service delivery protests didn’t start in the informal settlements of Rustenburg. “There have been a set of complex issues that have weighed on the sector stopping it from growing quicker,” says Baxter.
New headwinds approach. A tax review, which includes the mining sector, is due later this year while the likelihood of a carbon tax comes into view. Given the lack of development in respect of nuclear power, and the costs of developing wind and solar power, coal-fired power needs supporting, not discouragment.