GOING ABOVE GROUND

GOING ABOVE GROUND

In his Medium-Term Budget speech, the Finance Minister spoke about how growth in the commodities marketh as given the government room to allocate funding for addressing poverty and unemployment, but called for caution, “Taxes paid by the mining sector have been strong, due to the commodity price rally which continued through the first half of 2021. Notably, however, precious metal prices have started to soften. This means the revenue gains from the commodity price rally are expected to be temporary. Therefore, we should be careful about our spending commitments.”

SECTOR GROWTH

South Africa saw R120-million better-than-expected tax revenue for the first half of the 2021/2022 fiscal year, of which 85% came from the mining sector. This does not come as a surprise, with 16 of the commodities coming out of the country ranking in the top 10 internationally.

In October, mining production increased 2.1 % year on year. The biggest positive contributors to production were iron ore, platinum group metals (PGM) and chromium ore. Coal was the biggest negative contributor to production. Overall mineral sales increased 4.8% year on year with the largest positive contributors being coal and iron ore at 58.5% and 28.4%, respectively.

Early in the year, growth by the platinum group of metals was bolstered by an increase in global car sales, with South Africa positioned perfectly to take advantage of the demand.

COVID IMPACT ON MINING

“The leadership cooperation between the Minerals Council, the Department of Mineral Resources and Energy and organised labour helped the mining sector get back to work after the national lockdown at the beginning of 2020, with all the right preventative and mitigating controls in place thus saving lives and livelihoods in one of the most important economic sectors in the country,” said Roger Baxter, Minerals Council CEO.

The Minerals Council’s Chief Economist, Henk Langehoven echoed these sentiments, speaking to Mining Weekly, when reflecting on how the mining sector was impacted by COVID-19: “Mining is doing well at the moment. There’s a very good feeling that’s developed between the companies and their employees, because of how the companies kept paying salaries and tried to keep miners safe during the height of the pandemic.”

“In many ways, we contributed to sustaining lives and livelihoods outside the industry,” added Langehoven. Even within the industry, roughly 5000 jobs were created.

“The combination of better commodity prices and the lower than-expected contraction of global demand during the Covid-19 crisis resulted in the value of exports growing at a surprising rate, ending at an estimated 24% higher in 2020 than in 2019. This compensated for lower production and exports. Export sales by value have continued to grow during 2021, increasing by 54% year on-year in May.”

A significant part of the export sales have been the platinum group of metals which were bolstered by an increase in global car sales, with South Africa positioned perfectly to take advantage of the demand.

PRODUCTION YEAR-ON-YEAR, IN OCTOBER:

Chromium ore increased by 28.7%

PGMs rose by 24%

Nickel decreased by 30.5%

Diamonds decreased by 11.4%

SALES YEAR-ON-YEAR, IN OCTOBER:

Coal rose by 58.5%

Copper rose by 28.4%

Gold dropped by 37.9%

Chromium ore dropped by 32%

SOUTH AFRICA AND THE RESTOF THE WORLD

• 4th largest exporter of gold

• 5th largest coal producer in the world

• Ranks in the top 10 producers for 16 different commodities

• Around 75% of global production of platinum

• 6th in the world in mineral production production value