Sun is set­ting on SA gold in­dus­try

Finweek English Edition - - In Brief In The News -

Data pro­duced by au­dit­ing firm PwC makes it clear that South Africa’s gold in­dus­try is in its sun­set years. The ore bod­ies that once hosted min­ing worth nearly three-quar­ters of world pro­duc­tion are now a foot­note com­pris­ing 4.2% of the to­tal.

“Only new tech­nolo­gies can change the out­look for the SA gold in­dus­try,” said An­dries Ros­souw, a part­ner at PwC, dur­ing a pre­sen­ta­tion of the firm’s an­nual pub­li­ca­tion It analy­ses the per­for­mance of the sec­tor in terms of pro­duc­tion and fi­nan­cial re­turns.

“Oth­er­wise the sec­tor is in de­cline, es­pe­cially at cost in­creases that are above CPI. There is no new ma­jor in­vest­ment in the in­dus­try,” he said.

Ac­cord­ing to Min­er­als Coun­cil data, to­tal em­ployee earn­ings have in­creased to R29.5bn in 2017 from R14.7bn in 2007. This is de­spite to­tal num­bers fall­ing over the pe­riod: from 166 000 peo­ple in 2007 to 112 000 em­ploy­ees to­day.

In fact, the way rev­enue is di­vided be­tween stake­hold­ers makes for some in­ter­est­ing read­ing, es­pe­cially given that wage ne­go­ti­a­tions in the sec­tor are un­der way. Across the en­tire min­ing sec­tor in South Africa, em­ploy­ees took 47% of to­tal value gen­er­ated by it last year com­pared to 37% of the to­tal value 10 years ago.

Some 29% of to­tal value was rein­vested in the mines and 12% went to taxes. In­clud­ing bor­row­ings (6%), roy­al­ties (3%) and com­mu­nity in­vest­ments (2%), there’s pre­cious lit­tle left for the share­hold­ers who are, af­ter all, the providers of the share cap­i­tal.

You can see why the Min­er­als Coun­cil has been fight­ing mines min­is­ter Gwede Mantashe’s in­sis­tence that com­mu­ni­ties and em­ploy­ees share in 10% of prof­its in the event of new min­ing right

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