AMN - South African mining sector has mettle to overcome COVID-19 – comment by Yolanda Torrisi

South Africa’s mining sector has the mettle to emerge strongly from the COVID-19 pandemic that has gripped the world. While some may unfortunately not survive the 21-day lockdown, most will emerge owing to the strength gained from previous critical events and the resilience shown during recent difficult years.

As was the case with previous crises, many feared the worst when SA President Cyril Ramaphosa on March 24 imposed a 21-day lockdown to combat the unprecedented threat posed by the virus. However, as this period has progressed, the government, Minerals Council South Africa and most mining companies have worked well together, providing a degree of optimism.

The industry has shown strong resilience during the GFC when commodity prices tumbled, during the debt crunch of 2015 and during the drawn-out Mining Charter ordeal of more recent times. 

The move made by the government initially attracted some criticism and was described as being heavy-handed but the decisiveness displayed by the lockdown will save lives. It also provides South Africans with an indication that the government is prepared to make tough and timely decisions for the benefit of the nation as a whole.

Further optimism has been gained by the manner in which government and business have interacted to tackle the crisis. This may well lead to greater public and private cooperation in the future and, again, this will benefit the mining industry and South Africa as a whole.

Minerals Council spokeswoman Charmane Russell reflected this when she stated: “The cooperation between Government and the private sector has been excellent in the last few weeks. There’s a great deal going on behind the scenes in terms of the private sector stepping up to the table.” Indicative of this cooperation is AngloGold Ashanti making two hospitals available for exclusive use by provincial governments in managing COVID-19 cases.

Further optimism is provided by the investment opportunities that the crisis has created. Stock market volatility of the last few weeks represents an opportunity for investors, especially in the mining space.

Most mining companies have been quick to respond to the crisis by cutting spending, including director fees and executive salaries, and this will help ensure they are able to bounce back as quickly as possible when the COVID-19 situation is over. The larger diversified miners with bigger balance sheets appear better able to cope. RMB Morgan Stanley in a note to clients: “Even under a very long government-imposed shut-down, South African diversified miners’ balance sheets should be able to cope, a testament to lessons learnt [in the past].”

The mining sector is also well-positioned to tackle COVID-19 better than most in the South African economy owing to its expertise managing mining communities. As an example, the sector has been at the forefront of HIV-AIDS treatment as well as tuberculosis and other occupational hazards such as silicosis.

Unfortunately, not all mining companies have reacted as strongly as the majority and there have been three positive cases reported on mine sites in various provinces. This, alone, is evidence of why it is vital for all companies involved in the industry to adopt the appropriate safety measures for all workers.

Mineral Resources and Energy Minister Gwede Mantashe said: “We found that the mines are not at the same level in terms of their state of readiness to respond to COVID-19. There are some pockets of excellence, while others are lagging behind. We have encouraged mines to work together, in sharing information and best practice.”

This is particularly important at those mines in the energy sector, including coal, that have been permitted to continue to operate owing to the vital role they play in energy supply.

Inspectors from the Mineral Resources and Energy Department will redouble efforts to ensure compliance and bring defaulters to book. Mantashe said: “It is only when it is evident that there is extensive and continuing transmission that consideration could be given to closing a part or all of a mine. Closing a mine doesn’t stop the problem. We need to take a holistic approach that recognises this.”

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