A top Minerals and Energy department official Nchakha Moloi has expressed concern that a new wave of retrenchments could hit South Africa’s mining industry if the currency firmed above the seven rand to the dollar mark.
Moloi, deputy director general of the department, said retrenchments could be “inevitable” if the currency strengthened beyond the seven rand level.
He was quoted in the government news agency BuaNews as saying that it could lead to a decline in exports for South African minerals.
The rand has gained more than 35% against the US dollar this year, resulting in increased speculation among market commentators that it might break through the seven rand mark to the dollar this week.
Moloi told the agency that the possibility of a strengthening currency resulting in retrenchment was high because companies like Harmony Gold and East Rand Proprietary Mines were marginal and their export commodities were sold in US dollars.
The mines also imported components in US dollars. – I-Net Bridge