Does mining have a future in SA?

JOBS EVAPORATING: AVERAGE REMUNERATION’S NEARLY TRIPLED

Since the peak in 2012, the industry’s been shedding on average at least 1 200 jobs per month, every month and it seems the trend’s accelerated.

40 000 jobs were lost from the beginning of 2015 (more than 1 500 per month) this slowed at the end of 2016 to around 400 per month. In total, however, 67 300 jobs have been lost in the sector. since 2012

At least 1 200 jobs are lost every month, but there was some improvement in 2016.

Since the recent peak in 2012, the SA mining industry’s been shedding – on average – at least 1 200 jobs a month, every month. Using annual figures from the Chamber of Mines’ Facts and Figures 2016 statistics publication released this month, it seems the trend’s accelerated. In 2015, 16700 jobs were lost in the sector, while in 2016 that number spiked to 21500.

However, there was improvement during 2016 on the back of better commodity prices. The chamber says: “whereas 40000 jobs were lost from the beginning of 2015 (more than 1500 per month) this slowed at the end of 2016 to around 400 per month”.

In total, however, 67300 jobs have been lost in the sector since 2012. Employment in the gold and PGMs sectors make up nearly two-thirds of total mining employment. The problem is that SA gold mining is in long-term structural decline. Barring the 1500odd jobs added between 2015 and last year, the numbers have been in free-fall, along with production. A decade ago, with 166064 employees, SA produced 10.1% of total global output. In 2016, that had dropped 44% to just 4.4% of world gold production, which continues to increase.

But, total employee earnings in the sector roughly doubled from R14.7 billion in 2007 to R28.5 billion in 2016. This means the average annual remuneration per mineworker in the gold sector nearly tripled over the decade from R87354 to R246665.

There have been similar increases in the PGMs sector. The average annual remuneration per mineworker has gone from R98391 in 2007 to R266036 last year. Average monthly pay is R22170 (from R8199). The chamber says employee earnings in this sector increased by an average of 16.4% per year between 2005 and 2016. Across mining, the average annual remuneration per mineworker increased from R101043 in 2007 to R262553 in 2016.

Using data from StatsSA, the Chamber notes that “between 2010 and 2015, employees in the mining and utilities industries were the top-performing earners, with the largest nominal increases in earnings also recorded for these two sectors (R2500 and R1500 respectively)”.

The mining industry is very well-paid. In real terms, mining was 7.3% of total GDP in 2016, below the 8% average over the last decade. Primary mineral exports as a percentage of the total was at 21% in 2016, and as a percentage of merchandise exports, it was 28%. Both of these are below the averages over the past decade, of 23.8% and 32%, respectively. When it comes to fixed investment, the picture’s scarier. The year-onyear growth rate declined by 1% in 2015 and 3.8% in 2016. But, in the absence of other meaningful increases in fixed investment, mining’s contribution to gross fixed capital formation is at 18%, the highest it’s been since 2009-2011.

The chamber cautions that “although gross fixed investment has declined by only about 1% since 2013, the fact that the sector’s really in survival mode is reflected in a progressively worsening net investment trend: -2.5% in 2013, -0.4% in 2014, -10.5% in 2015 and a more than 100% contraction in 2016”.