South Africa’s key mining sector has committed itself to work with the government to
rebuild the economy ravished by COVID-19.
Minerals Council South Africa CEO Roger Baxter said the mining industry supports
President Cyril Ramaphosa’s call to rebuild the economy.
“The South African economy was in a crisis even before the outbreak of the COVID-19
pandemic, with the country performing well below its potential. Over the past decade,
the South African economy decoupled from other emerging economies in terms of having a
much slower economic growth rate,” Baxter said.
He added that the government should address the structural and institutional constraints that will enable the mining sector to help lead the economic recovery.
“If all these issues were to be addressed, we estimate that mineral sales could increase by
R61-billion and tax revenues by R5-billion; 70 000 jobs could be saved; 26 000 additional direct mining jobs could be created in the next four years.”
Mining production in South Africa shrank 9.1% year on year in July, following a downwardly revised 27.2% in June.
It was the fifth consecutive month of downturn in mining activity but at the softest pace in the current sequence, amid the easing in restrictions.
Geoff Nölting, FNB economist, said the mining sector was not out of the woods yet.
“The mining sector still faces headwinds such as attracting investment [particularly for greenfield projects], lower global competitiveness [due to much deeper ores relative to
other regions], regulatory uncertainty and electricity costs and supply,” Nölting said.
“These are concerning as the sector accounts for roughly a quarter of total export earnings. However, the higher commodity prices in commodities such as gold and PGMs [platinum group metals] may well incentivize producers to raise output in higher-cost areas of
their mines in the future.”
