AMN - The mining pain is not subsiding - comment by Yolanda Torrisi

Two months since the Mining Indaba was held in Cape Town, the dire warning of Anglo American chief executive Mark Cutifani seems to be living out the reality of the current state of the mining industry.

It has been deteriorating for some time amid the worst commodity slump since the financial crisis.
Meanwhile, the South African mining minister has expressed frustration that companies including Anglo American are not consulting with the government over restructuring plans that are creating a huge unemployment issue in the country.

Commodity markets have been on the steepest downward trajectory that the industry has seen for the last four decades.

Anglo has had to make tough decisions and is selling and shutting its loss-making assets as part of a sweeping restructuring. 2016 will be one of the most challenging times in the industry and things will get worse before they get better.

Earlier this year Anglo American’s platinum division recorded a pre-tax loss of $US874 million for 2015 compared with a profit of R454 million in 2014.

Platinum companies have been battling declining prices and increasing costs for too long. This is all on top of the crippling five month strike in 2014. The slumping platinum price has been one of the largest challenges Anglo has faced.

It is believed that South Africa’s mining sector has shed more than 47,000 jobs in the past three years and a further 32,000 are likely to go by the end of the year.

Such huge job losses are very sensitive politically for countries such as South Africa which are blighted by anaemic economic growth and exceptionally high unemployment.

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