MiningFocus Africa

Although still considered a “sunrise industry” by the Minerals Council of South Africa – formerly known as the Chamber of Mines – SA’s mining industry has faced job losses, a fall in its exploration budget and rising input costs for the past decade.

Statistics of the industry’s performance between 2007 and 2017, collected and released by the council this month, show that mining still makes a significant contribution to GDP of 6.8%, or R335bn – marginally lower than the 7% reported in 2016.

Here are seven figures that show how the industry has changed over the past decade.

44.2% decline in the JSE’s resources index

The council compared the performance of the Johannesburg Stock Market’s resources index to global resource exchanges.

Over the past three years, the JSE resources index declined by 3%, over a five-year period it declined 9%, and over 10 years it declined 44.2%. The negative performance reflects a decline in confidence and investment in the industry, the council said.

“Our interpretation of the performance of the South African resource index is that it shows lingering concerns relating to regulatory and policy uncertainty,” the report read.

Although fixed investment in the mining sector has also been on a downward trajectory, it did recover in 2017, when R80.9bn was secured. This was up from the R67.6bn in 2016.

“The recovery in fixed investment is a sign of better prospects for the sector, but it still hung in the balance at the end of 2017,” the council said

$316.9m less spent on exploration in 2017 vs. 2007  

South Africa’s exploration budget declined by $316.9m in the decade between 2007 and 2017. The budget, denominated in US dollars to make comparisons easier, decreased from a high of $404m in 2007 to a low of $87.1m in 2017, according to data from S&P Global Market Intelligence cited by the Minerals Council.

South Africa’s share of the Africa-wide exploration budget also shrank, from 23% in 2007 to just 8.3% in 2017.

The government, facing public anger of rising fuel prices, has said it wants exploration budgets to grow for SA to tap new sources of energy.

Energy Minister Jeff Radebe told Parliament on Wednesday that his department was prioritising exploration so that SA could be less reliant on imports of oil as an energy source. Similarly, Minerals Resources Minister Gwede Mantashe told Parliament in May that government would move forward with shale gas exploration.

Employment 56 000 lower than in 2008

In 2008, at the peak of the commodities cycle, there were 521 035 people employed in the SA mining industry. This increased to 526 512 in the 2012, before falling every year to 2017. There were 56 368 fewer jobs in the mining sector in 2017 than in 2008.

The greatest fall was in the gold mining sector, where, according to the Minerals Council, 75% of SA gold mines are unprofitable. Employment decreased from 166 064 in 2007 to 112 200 in 2017, a fall of 32%.

8.9% average rise in input costs

Data tracked between 2013 and 2017 shows that input costs have been rising at a faster pace than selling prices – affecting profit margins and employment, according to the council.

The mining input cost index was set up by the council to measures mining input cost inflation. It shows that the index rose by an average of 8.9% between 2013 and 2017.  It ranged from a low of 3.6% in 2015 to a high of 11% in 2017.

46% less gold produced in 2017 vs. 2007

Domestic production of gold declined 46% from 252.6 tonnes in 2007 to 136.8 tonnes in 2017. Over the same period employment dell by a about a third. Sales declined 37% from 242.7 tonnes in 2007 to 153.7 tonnes reported in 2017.

For Platinum Group Metals, production declined from a high of 304 tonnes reported in 2007 to a low of 188 tonnes reported in 2014. Total production again rose to 260 tonnes in 2017.

88 fatalities

In 2017, the industry reported 88 fatalities, up 17% from the 73 reported  deaths in 2016. Although much lower than the over-200 fatalities reported in 2007, this was the first regression in 10 years.

In August 2018, the council launched an initiative to promote safety and health in the industry. So far in 2018, there have been 58 deaths recorded.