Despite being superseded by the manufacturing and services sectors in terms of contribution to the country’s GDP, South Africa’s mainstream mining industry still accounts for more than 30% of the market capitalisation on the JSE, and is characterised by its high degree of technical expertise and the facility with which it is able to mobilise capital for new ventures.
Minister of Minerals and Energy Buyelwa Sonjica, speaking to delegates at a mining seminar in Toronto, said the exploitation of minerals laid the foundation for the development of the modern South African economy.
‘It was mainly on the back of mining activities that rapid growth in infrastructure occurred and emerging manufacturing and financial services sectors flourished and supported the growing mining industry during the first half of the 20th century,” she said. The Department of Minerals and Energy is responsible for legislation to do with issues of mining and energy.
The minister said South Africa has the largest resources in the world of platinum-group metals (more than 85%), chromium (more than 70%), manganese (80%), gold (40%) and also contributes significantly towards the global production of coal and iron ore.
She said gold, the main contributor to the revenue generated by the mineral industry for more than a century, was recently replaced by platinum-group metals as the top revenue earner.
South Africa’s current gold resources are rapidly being depleted as grades fall and costs rise. Most of the remaining 40% lie at depths greater than 4000m below the surface and are too deep to mine. With the high prices being fetched for platinum, palladium and rhodium, the platinum-group metal industry is buoyant and expanding very rapidly.
Platinum-group metals are the new stars of the country’s mining industry.
Said Sonjica: ‘A new bull phase in the commodity cycle has commenced. It appears this is one that could last for a few decades, if the main drivers of booming commodity prices — the exploding economies of China and India — are anything to go by. It is therefore imperative for us to take full advantage of the boom in prices before the cycle reverses.
‘In Africa, over the last five years or so, mineral commodities have become the life-blood that could finally bring growth and development to the continent where poverty is a major problem, creating real wealth and, as a spin-off, the prospect of social harmony in the strife-torn areas.
‘Even in South Africa, current production rates are insufficient to meet the tremendous increase in demand, despite our longstanding history of mining and well-established infrastructure. We need to invest significantly in increasing the output capacity of existing as well as new mines.
‘The main stakeholders of the South African mining industry have committed themselves to pooling resources to ensure that they remain the mineral-producing success story of Africa.”
She said the department of minerals and energy will continue promoting investment in unexploited, or minimally exploited, economically viable mineral deposits, thereby maintaining and enhancing South Africa’s global competitiveness.
‘Steps taken at state level to ensure that mineral exploitation continues to play a major role in supporting our economy will include maintaining ongoing macroeconomic stability, advising on the need to maintain a fiscal environment that will always encourage investment and maintaining competitive energy prices.
‘We will also continue supporting research and development as well as developments in mineral technology,” said Sonjica. ‘Small-scale mining should also not be neglected, especially in Africa. Often stigmatised by its environmental degradation, artisinal mining can nevertheless be a force for positive change if properly regulated. Small-scale mining is an opportune way for kick-starting job creation in impoverished areas.”
She said the department would also ensure safe and healthy working conditions and ensure a clean, healthy and unpolluted physical environment.
‘Unfortunately, not all of South Africa’s citizens have been able to receive their fair share of the economic benefits or rewards from the mining sector. For some 100 years, black people were prevented from participating fully in the mining industry.
‘This policy was entrenched through the actual imposition of mining laws that specifically prevented black people from owning or working in managerial positions in mining ventures.
‘South Africa has taken a decision to ensure the addressing of past imbalances takes place, actively making it a point that women are empowered not just to work in the mines, but become actual owners,” she said.
‘Recently, we have taken the processing of our minerals further down the value chain and the gain achieved has become abundantly clear to us.” She said the African Mining Partnership is an outcome of Nepad.
‘It makes perfect sense for the African ministers responsible for mining to get together and share experiences and expertise.
‘South Africa continues to be a good investment destination, because we have the competitive advantages of good infrastructure and long-term expertise. We also have a legal and financial framework that speaks to the needs of the investor. As our minister of finance has already alluded, the issue of flow-through shares is taken seriously by government as this will help in further entrenching the best environment for investors,” she said.