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South Africa Mining Report Q2 2010
Business Monitor International, March 2010, Pages: 53
The South Africa Mining Report provides industry professionals and strategists, corporate analysts, mining associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on South Africa's mining industry.
Mine Nationalisations Seem Unlikely In February 2010, mines minister Susan Shabangu told local media that the government will not nationalise the country’s mines ‘in my lifetime’. The minister’s comments come in light of repeated calls from the African National Congress (ANC)’s youth league president, Julius Malema, to nationalise the industry. Shabangu added that the ANC has ‘at no stage’ adopted nationalisation as a policy. However, the youth league has since called the ministers comments ‘disingenuous’ and added that nationalisation is ‘going to be a reality’.
For now, the mining industry is remaining sanguine in the face of the youth league’s threats, with Anglo American stating that it remains confident in the South African government’s commitment to free market policies and that any action to impair the industry would have serious economic costs. Separately, Shabangu said in early February 2010 that the long-awaited review of the country’s Mining Charter would be released to the public by the end of March. The report will examine the findings of the review in our Q310 update.
New Data For 2010, the publisher has made significant changes to the way in which we forecast mining data. As well as using local statistics agencies and associations, we now also draw on the expertise of the UN’s Industrial Commodity Statistics Database, the US Geological Survey and the World Bureau of Metal Statistics for our historical export and production data. We then forecast this data using our own proprietary econometric model. Human intervention also plays a necessary and desirable role in our mining forecasting; experience, expertise and knowledge of industry trends and developments ensuring that we can spot likely future changes and anomalous data that a purely mechanical model would not.
Country Overview Accounting for a third of South Africa’s total exports, mining remains a vital industry for the country’s economy. South Africa hosts the world’s largest deposits of gold and about 80% of global platinum reserves. It is also a significant producer of diamonds. The country’s mining industry has matured and the pace of mineral exploration has fallen over the years, even more so in recent months as firms reduced capital expenditure (capex) and scaled back projects.
Industry Forecast South Africa has the largest mining endowment in Africa and the onus of spearheading the continent’s mining activity falls on the South African industry, both in terms of economic growth, as well as setting standards for mining regulations
The report forecasts that South Africa’s mining sector will reach a value of US$37.38bn by 2014. In the nearterm, growth should bounce back from the depressed levels of 2009, as the country is likely to be among the first to benefit when the global economy returns to strength. However, the fact that South Africa is a mature market may limit its scope for future mining sector growth in the decade ahead. Meanwhile, reserves are depleting, while power shortages and labour unrest continue to disrupt mines. That said, mining remains a key economic sector for South Africa, contributing some 8% to GDP.
What the long-term future holds for the South African mining industry depends a lot on the result of ongoing exploration activities and any future changes made to mining regulations by the government.
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