“South Africa still has significant mineral potential, which can be unlocked with the right policies and an enabling environment.” – Roger baxter
Anglo American Platinum, Modikwa
IS RECOVERY ON THE CARDS? Roger Baxter, CEO of the Minerals Council South Africa, shares his views on whether the mining sector will recover after years of steady decline. By Ryland Fisher
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he man at the helm of the Minerals Council South Africa, CEO Roger Baxter, feels that the sector can regain its lustre and play a significant role in reviving our economy. “South Africa still has significant mineral potential, which can be unlocked with the right policies and an enabling environment. In our view, mining can get back to above 10 per cent of GDP and lead the economic revival of the economy,” says Baxter. “To do so requires an unlocking of investment in the sector (which, in turn, requires a more competitive investment environment). Mining can grow employment, GDP, exports, taxes and transformation, with the right enabling framework. There is progress being made. The current health crisis has acted as a catalyst for all of us to realise that by working together we can change the environment in a positive way.”
FAST FACT
Mining went from contributing 14,7 per cent of gross domestic product (GDP) in 1994 to about 8 per cent in 2019. Source: Statistics SA
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MINING’S PROBLEMS LINKED TO ECONOMIC WOES Baxter links the problems in the mining industry to South Africa’s own economic woes combined with lost opportunities, mainly due to bad policy and expenditure decisions by government. “South Africa’s economy decoupled from other emerging economies, from a growth rate perspective back in 2009 after the global financial crisis. In the past decade, South Africa grew a paltry 1.5 per cent per annum versus 4 per cent for other developing countries. In that same period, South Africa’s government lived totally beyond its means with gross public debt rising from 24 per cent of GDP in 2008 to 81 per cent now. “South Africa has lost ground down the global competitiveness ranking falling to 60th in the World Economic Forum rankings and 84th in the World Bank Ease of Doing business rankings. Even before the pandemic, the South African economy was in an economic crisis with a record number of people unemployed, and rising poverty and inequality, among others. “Over the past 10 years, the South African mining sector went sideways, missing out on the 2011/12 boom. In 2019, South Africa
Northern Platinum, Booysendal
accounted for a paltry 1 per cent of global exploration expenditure and only 0.1 per cent of global greenfields exploration. With limited exploration activity, the new projects pipeline has been weak; very few large-scale new mines have been developed (most have been brownfields expansion of existing ops),” says Baxter. Some of the challenges faced by the mining sector over this period, says Baxter, include a more than 500 per cent increase in the electricity price (which has had a huge cost impact on electricity-intensive mines and smelters), load shedding (the sector lost three per cent of production in 2019 due to load shedding), and “regulatory uncertainty created by former minister Mosebenzi Zwane when he published a damaging charter in 2017. The result has been wasted potential in mining”. The mining bosses, represented by the Chamber of Mines and then the Minerals Council, have consistently opposed this Mining Charter. However, since then, there has been greater co-operation and understanding between government and business, including the mining industry.
EMPOWERMENT
2020/11/27 4:02 PM
