Saturday, May 3, 2014

Investments in Mining: South Africa – Part II


Investments in Mining: South Africa – Part II

South Africa is one of world’s leader in mining. The country has an abundance of mineral resources that  account for a significant proportion of both world production and reserves; while South African mining companies dominate many sectors in the global industry. South Africa’s position as the largest gold producer in the world was lost to China in 2007. Gold now contributes about 5.8% to GDP; precious metals account for 65% of the country’s mineral export earnings and 21% of total exports of goods. In the mining industry about 460,000 people are working, and 400,000 work in suppliers and services.

Source: South Africa Major Business Sectors Compiled by: Swiss Business Hub South Africa

Contribution of mining to the South African economy. The mentioned below Annual Report of The Chamber of Mines of South Africa cites the following:
“Perhaps the best way of illustrating the role that mining plays in the economy is to temporarily “remove” the mining sector from the economy and then to reflect on the actual economic contribution. With mining temporarily removed, the economy would lose:
  • about 18% of GDP
  • over 50% of merchandise exports
  • about 1 million jobs
  • about 18% of gross investment (9% directly)
  • approximately 30% of capital inflows into the economy via the financial account of the balance of payments
  • about 35% of the market capitalisation of the Johannesburg Securities Exchange (JSE)
  • 93% of the country’s electricity generating capacity
  • about 30% of the country’s liquid fuel supply
  • the largest contribution by value to black economic empowerment in the economy
  • about 20% of direct corporate tax receipts (R33-billion in 2008).”
According to the data from Department of Minerals and Energy current South African mining operations include:
  • 145 diamond mines
  • 64 coal mines
  • 49 gold mines
  • 28 platinum-group metal mines
  • 59 different minerals from 993 mines
  • Mineral exports to 82 countries
Despite the fact that South Africa’s mining industry is over a century old, it is still not developed to a full range. While holding the world’s largest reserves of gold, platinum-group metals and manganese ore, the country has considerable potential for the discovery of deposits in areas yet to be explored.  Only two strategic minerals – crude oil and bauxite – are not available in South Africa. There are five basic mineral categories that are well developed: precious metals and minerals, energy minerals, non-ferrous metals and minerals, ferrous minerals and industrial minerals.
Those who are interested in geologic aspect, may read a relevant Chapter (Rocks for Crops: South Africa) of  Rock for Crops by Professor Peter van Straaten – that has a wealth of information on mining in various countries of Africa.
The Chamber of Mines of South Africa in their 2009 Annual Report provides a detailed picture of what is going on with mining in the country.  In fact I would highly recommend every mining professional to read this – a very comprehensive analysis of world mining trends and of South Africa’s position. This is a quality document done by the quality staff. As an example, I would like to reproduce the following graph:

As it is mentioned in the Report presently mining is done by the following companies:

Base metals/minerals & exploration companies: ASA Metals (Pty) Limited; Delta Mining (Pty) Limited; G&WBase and Industrials (Pty) Limited; Imerys South Africa (Pty) Limited; Randgold and Exploration Limited
Chrome mining: Samancor Chrome
Gold mining: African Rainbow Minerals (Gold) Limited; AngloGold Ashanti Limited; Gold Fields Limited; Harmony Gold Mining Company Limited; Pamodzi Gold
Iron ore mining: Kumba Iron Ore Limited

Platinum mining: Anglo American Platinum Corporation Limited; Impala Platinum Limited; Lonmin Platinum Limited; Ridge Mining
When you go to the Web-sites of mentioned companies via provided here URLs – you may find a lot of information on mining of relevant minerals.
Apart from its abundant mineral reserves, South Africa’s strengths include a high level of technical and production expertise, and comprehensive research and development activities.
Current situation in the industry is interesting. In February 2010, mines minister Susan Shabangu told media that the government will not nationalize the country’s mines ‘in my lifetime’.  It seems that currently  the mining industry is remaining optimistic despite of the youth league’s threats, however Anglo American states that it remains confident in the South African government’s commitment to free market policies. And everyone is waiting for release to public of review of the country’s Mining Charter. Business Monitor International  forecasts that South Africa’s mining sector will reach a value of US$37.38bn by 2014. In the near term, growth should bounce back from the depressed levels of 2009, as the country is likely to be among the first to benefit when the global economy returns to strength.
As usual, some helpful links:

1 comment:

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