South Africa expects the metal price downturn to get worse and affect the economy further through capital flight and job losses, Minerals and Energy Minister Buyelwa Sonjica said on Tuesday.
Sonjica said the metal price downturn had hurt the country’s exports and the economy, leading to a loss of jobs and investment, but the government was trying to mitigate the crisis through measures recommended by a government-led task team.
Sonjica did not elaborate on the recommendations.
”The industry is suffering but more so the small players. We are seeing smaller mines closed down, bigger ones reducing their capital injection and in the process the much needed jobs being lost,” Sonjica said.
”The biggest challenge with the meltdown is that it is still an unfolding process and nobody knows for certain at this stage when it will come to an end.”
Mining accounts for nearly 7% of the country’s gross domestic product and is a key cornerstone of the economy. Mining companies in South Africa are cutting thousands of jobs as the prices of most metals fall, adding to the country’s high unemployment rate and triggering strike warnings by unions.
So far a total about 24 000 mining jobs are on the line in the mining sector alone, after Anglo Platinum, which is majority-owned by global miner Anglo American, the world’s biggest platinum producer, said it would cut 10 000 mostly contract jobs to counter lower platinum prices.
The metal price downturn is a major theme at Africa’s biggest mining conference being held in Cape Town, which itself has seen a 25% downturn in attendance to 4 000 participants after several cancellations, organisers have said.
Sonjica said the government would not extend the April 30 deadline for mining companies to comply with the mining charter and would speed up processing of exploration and mining right applications.
South Africa’s mining charter, implemented in 2004, transfers all mining rights to the government and demands that mining firms meet a list of conditions before they can secure new mining licenses.
”We are firmly committed to processing all prospecting exploration applications within six months, while mining rights will be processed within a year,” Sonjica said.
Trying to reassure investors on the future of power supply after the country suffered power woes last year, Sonjica said the country will have enough power supply by 2018 despite a postponement of its nuclear expansion programme.
South Africa has said it expects its next nuclear power plant to come on stream by 2019, two years later than initially planned by utility Eskom, which dropped plans to build a second such facility in the country due to financial woes.
”I want to stress … the nuclear project has been postponed, not abandoned.”
On safety in mines, Sonjica said she welcomed further discussions on recent amendments to the Mine and Safety Act 1996, which will give the state the power to impose fines of as much as one million rand up from R200 000, or five years in jail for mine bosses who ignore safety regulations.
The amendments have yet to be signed into law, and mining companies have said these amendments are too punitive.
Sonjica said she was open to talk to the companies saying as much as she wanted safety to be improved, she was also keen to avoid a flight of skills should managers quit their jobs. – Reuters