Report: South African mining may only have decades left
CAPE TOWN, South Africa — South Africa’s overall mining profits slipped by more than $5 billion in the last financial year, while the country that was once the world’s largest gold producer might have less than 30 years of a viable gold industry left without renewed investment, according to a new report by big four auditing firm PwC.
The report released this week also estimated South Africa’s iron ore mining industry may only last 13 more years without further commitment from companies to identify, pursue and extract new deposits. The country is among the world’s top 10 producers of the raw material key to the steel-making process.
PwC’s annual report on the South African mining industry said global declines in some commodity prices following the COVID-19 pandemic contributed to the reduced profits.
But so did South Africa’s challenges of currency fluctuations, high inflation and logistical problems in exporting minerals because of deteriorating road, rail and port infrastructure.
It didn’t mention whether environmental concerns played a role in lost investment as customers, governments and activists worldwide call for greater action to combat climate change. Mining operations account for some 4% to 7% of global greenhouse gas emissions, according to global consulting firm McKinsey & Company.
The predictions for South Africa’s gold and iron ore industries — and to a lesser extent its platinum and coal — are extreme worstcase scenarios but highlight the need for miners to recommit. In the gold mining sphere, South Africa faces competition from Ghana, countries in South America and elsewhere, Andries Rossouw, PwC’s Africa energy, utilities and resources leader and an author of the report, said in an interview Wednesday.
The report also highlighted an urgent need for Africa’s most advanced economy to refocus part of its mining sector on green energy metals and minerals like copper, nickel, lithium and cobalt. They are in high global demand because they are used in electric vehicle batteries and other renewable energy sources.
South Africa has an opportunity to benefit from that demand, which also would need millions of dollars in investment, the report said.
“There’s a clear shortage of energy metals with committed mine production nowhere near projected demand,” the report said. “This presents several opportunities for South Africa which could reshape industries, diversify the economy and drive future prosperity.”
Mining is crucial to a South African economy that is experiencing slower growth than expected and has the highest levels of unemployment in the world.
“Considering these challenges and investors having investment options other than South Africa, an important question arises: How many years ... of mining can South Africa expect to have for certain key commodities; gold, coal, iron ore and platinum group metals?” the report said.