South African mining industry is at risk

Marikana has cast a shadow over the mining industry in South Africa

Mineral Resources Minister Susan Shabangu must take responsibility for the conditions in South Africa that are causing the mining industry to contract and shed jobs.

Instead, she is playing the blame game, accusing Amplats of ‘acting in bad faith’ and making a ‘unilateral decision’ to close shafts and lose 14 000 jobs.

Minister Shabangu still does not appear to grasp the concept that mining is not an endless cash cow. She must start to understand that unless mining companies can operate profitably, they cannot create jobs. It is unrealistic to expect the industry to both create jobs and pay much higher taxes.

Under Minister Shabangu’s tenure the mining industry has been labouring under policy uncertainty, including threats of a super-tax, imposed limits on raw material exports and licensing rights confusion. The industry has also borne the brunt of rising input costs (largely thanks to administered prices from Eskom); rising costs of extraction; fluctuating global demand and a labour union regime that ignores workers’ rights for the sake of political gain.

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South Africa’s mining industry has contracted at a rate of 1 % per annum, yet the industry has grown at an annual average rate of 5 % in the countries comprising our 20 top competitors. Mining is the backbone of the economy and, thanks to Minister Shabangu’s inability to transform the business environment, there is a serious risk that it may contract even further. Amplats alone will be investing only R 100 bn in capital expenditure over the next ten years; 25% less than initially intended.

Mining could provide a solid foundation for flourishing economic growth if government and the ruling party abandoned their ideological fallacies and did what was in the best interests of the country and all South Africans – create an enabling environment in which business can flourish and more jobs are created

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