AMN - South African mining needs a reboot – comment by Yolanda Torrisi

It’s time for a rethink in South Africa after the nation experienced a third quarter of falling production in the mining industry. The industry had a 10.8% decline in production in the March quarter, experiencing contraction after struggles in the industry’s diamond, iron ore and coal sectors.

South Africa’s woes on the mining front were also reflected in a 3.2% overall decline in the economy during the first financial quarter of the year. The economic contraction was a record for the southern African nation, beat only by the 6.1% decline in the March quarter of 2009, during the dark days of the global financial crisis. During the GFC-era ’09 first quarter, the manufacturing industry also experienced a greater fall than the economy, declining 8.8%.

The Minerals Council South Africa is concerned and has understandably argued the industry shrink-down has created a catastrophe. With South African production falling by record levels last quarter, it is clear a rethink is needed to prevent further shrinkage of the mining industry.

The council has flagged the disappearance of jobs and major miners as major pressures affecting the local scene, highlighting each job that disappeared from the industry affects about 10 dependent people in the economy.

One job lost in mining can also mean 1.7 jobs lost in a related industry, affecting another 17 or so more South Africans who are reliant on those workers. One job lost means more than 28 other people experiencing a loss of support.

In the past 25 years, full-time employment in mining has shrunk by 146,457 people, or 24%, in South Africa, with the industry’s full-time headcount shrinking 11% or by 56,366 people in the past five years. Based on the one loss affects 10 dependants estimate, up to 4.4 million people were affected by the mining industry downturn in the past 25 years — and up to 1.7 million in the past five years.

It is clear change is needed, and promptly, with all parties needing to work together to keep things moving.

The Mining Charter III is one way to evoke change, even though its uncertainty around proposed black empowerment transaction changes is casting a shadow over industry.

Council members have argued an industry sustainability focus is another way we can move things forward, along with a promised start to the agriculture industry rejuvenation effort meant to help the nation replace mining as a significant income earner.

To reboot its economy South Africa can take a leaf out of the books of other countries on the continent and think about how power-friendly, cost-cutting environmentally friendly measures might help rejuvenate mining project proposals. After all, sustainability is an opportunity to close the skills gap and green design can help miners minimise their carbon tax effects.

With major miners disappearing from the South African scene, exploration and development projects are vitally important to the nation’s future. Making the numbers stack up through low-cost power inputs is just one way to improve the bankability of projects and get them over the line with financiers so the industry can help rebuild the economy again for the benefit of all.

- Yolanda Torrisi is Chairperson of The African Mining Network and comments on African mining issues and the growing global interest in the continent. Contact: yolanda@yolandatorrisi.com