AMN - Concerning trends for South African mining – comment by Yolanda Torrisi

Despite statistics showing that South Africa’s mining industry performed slightly better in the first quarter of 2017 than in the corresponding quarter of 2016, there are concerning underlying trends, according to an official from the country’s Chamber of Mines.

The statistics released early in June show that the sector contributed 12.8 per cent to GDP during the March quarter.

Commenting on these figures to SABC News, the chamber’s chief economist Henk Langenhoven said they masked the precarious position of South Africa’s mining sector.

He said that with the global economy seemingly on the mend, albeit slowly, positive international macro-economic trends should have had a positive outcome for the mining sector. The trends included improving prices for some commodities, with the rand commodity price index improved by more than 20 per cent during the March quarter.

However, employment numbers were not improving, and virtually no new investment was taking place. “In fact, 2016 gross and net fixed investment showed strong declines. The potential positive impact of mining improvements on the economy have not materialised,” he told SABC News.

Backing up his concerns, Henk Langenhoven stated that quarter-on-quarter value-add by mining had declined, the cost of employment was declining, gross operating surplus declined over the same period, and there was virtually no net investment in the March quarter.

The dark clouds over South Africa’s mining industry are not made any lighter by continuing uncertainty fed by the country’s ever-changing mining policies and regulatory concerns.

Henk Langenhoven told SABC: “Sadly, all indications are that this recession is of South Africa’s own making. Even the correlation between South Africa’s downgrades and the government’s debt-to-GDP ratios testify to the broader truth of this statement.”

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