South Africa’s mining industry has been hard hit by sharply lower commodity prices due to the global economic downturn and is under a ”severe strain”, Minister of Mineral Resources Susan Shabangu said on Tuesday.
Analysts had forecast the sector could lose more than 100Â 000 jobs this year owing to the crisis, but Shabangu told Parliament a government-led process to save jobs had paid off.
”The mining sector is under severe strain, but we have sown the seeds of a resilient economy,” Shabangu told Parliament during her budget vote speech.
”The aggregated commodity prices of minerals produced in the country lost some 40% of its value, while job losses were constrained to less than 25Â 000, representing about 5% of the total employment in the industry,” she said.
Shabangu said she was keenly following consolidation in the mining sector. Before her speech to Parliament, she told reporters the government opposed a possible merger between Xstrata and Anglo American.
”We are keenly watching these developments to ensure, among others, that such consolidation does not take us back to the age of anti-competitive practices, that there are no job losses and to ensure that it does not affect market principles,” she said.
Anglo rejected Xstrata’s approach on Monday.
On mine deaths, Shabangu said earthquake monitoring systems needed to be reviewed after two workers died at a Gold Fields mine this weekend after a tremor.
Shabangu’s Cabinet counterpart, Dipuo Peters, who heads the Energy Ministry, said an internal threat to the country’s mines still existed because the country was battling an energy crunch.
Power shortage
Peters, who also spoke in Parliament, said power supply was still vulnerable, but the global downturn had eased electricity demand and helped Africa’s biggest economy cope.
The country, which is the world’s top producer of platinum, and a major source of gold, has experienced rationing of power since January last year when the national grid nearly collapsed, forcing mines and smelters to shut for days.
”We are far from being out of the woods. In fact, was it not for the economic downturn, we would be load-shedding,” Peters told Parliament during her budget vote speech.
Peters said the country had the potential to save up to 30% in power use through energy efficiency.
South Africa’s state-owned utility, Eskom, which supplies 95% of the country’s power, has embarked on a R385-billion new capacity build programme, with two 4Â 800MW power plants due in 2015 and 2016.
On fuel supply, Peters said a 19-million litre ethanol plant, being developed by the government and a state-owned agency, was expected to be commissioned in December 2011.
”This is one of many projects that will be developed over the next five years. It is our goal to displace at least 5 % of crude oil based fuels with biofuels,” she said. — Reuters