Sun is setting on SA gold industry
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