Amid a year fraught with unparalleled challenges, the South African mining sector emerged as a beacon of resilience and strength, contributing significantly to the national economy and societal welfare in 2023. Despite grappling with historic energy shortages, severe rail and port bottlenecks, and fluctuating commodity prices, the industry not only surpassed expectations but also thrived, generating jobs and increasing tax contributions to the fiscus.
The Minerals Council South Africa, in its annual Facts & Figures 2023 booklet, provided a comprehensive summary of the sector’s performance, showcasing the creation of over 7,500 new jobs and a total employment figure of 477,000 individuals. This achievement comes amid a struggling national economy characterized by high unemployment rates, with the mining industry raising total wages by 7% to R186.5 billion.
Mzila Mthenjane, CEO of the Minerals Council, expressed satisfaction with the mining sector’s substantial economic contribution, despite facing significant challenges, including unprecedented electricity load curtailment, debilitating rail and port failures, and widespread criminal activities. The industry’s contribution to the fiscus, including direct company taxes, royalties, and employee pay-as-you-earn tax contributions, saw an increase of R9 billion, reaching R135.3 billion.
The latter part of 2023 and the onset of 2024 witnessed several companies announcing restructuring processes to adapt to the reduced electricity availability, severe rail constraints, harbor delays, and downturns in coal and platinum group metals (PGMs) prices. This repositioning is crucial against the backdrop of a challenging year where:
– South Africa’s mineral sales in nominal terms declined by more than 13% in the first ten months of 2023, marking the first calendar year decline since 2015 and the largest annual fall since the global financial crisis in 2009.
– The direct contribution of mining to the country’s gross domestic product (GDP) fell by 12% to R425.6 billion, with its percentage contribution to GDP dropping to 6.2% from 7.3%.
– Mineral exports decreased by more than 11% to R781.6 billion.
Hugo Pienaar, Chief Economist at the Minerals Council, highlighted the necessity of fast-tracking structural reforms in the energy and logistics sectors, agreeing on inflation- and productivity-related wage increases, implementing reasonable electricity tariff hikes, and improving municipal service delivery to enhance the industry’s competitiveness.
The challenges faced by the PGM and coal sectors, the biggest contributors to mineral sales, underscore the negative impacts of Eskom and Transnet on mining sales and output performance. Both sectors experienced steep falls in prices, with PGM sales declining by 33.3% to R199 billion and coal sales falling by 22% to R192.2 billion.
The Facts & Figures 2023 booklet also revealed efforts by coal companies to safeguard the 600km rail line to Richards Bay to counteract the effects of cable theft and vandalism. However, the sudden decline in prices has made it unsustainable to continue these efforts.
The Coal Leadership Forum of the Minerals Council is working with other bulk commodity forums to engage Transnet, the Department of Public Enterprises (DPE), and the DMRE to find lasting solutions to the problems in the rail and port sectors, particularly impacting the Richards Bay Coal Terminal and the connecting rail network on the Northern Corridor.
As the global inflation is expected to decrease in 2024, supporting economic growth and underlying commodity prices, there is optimism for a less intense load-shedding, progress on mining logistics, improved safety performance, and a downward trend in crime around mine sites. Mthenjane emphasized that these improvements could lead to an even greater contribution from mining to the overall economy, highlighting the critical nature of the upcoming elections for fostering an inclusive and progressive South Africa through responsible citizenship.
