Minerals Council on state of the mining in SA
According to Minerals Council’s initial estimates, mining GDP will have declined in nominal terms by nearly 4% in 2020, to a value of R361.6 billion, said Henk Langenhoven, Chief Economist at the Minerals Council. The COVID-19 lockdown resulted in an estimated inflation adjusted contraction of between 10 and 13%.
Physical production of metals and minerals was between 10 and 12% lower, which has been exacerbated by legacy logistical constraints. But the strong performance of many commodity markets meant that the value of mining turnover rose by 10% and the value of exports by 24%, demonstrating the very real value of a strong mining industry to South Africa.
“Based on available data we’ve seen a decline in employment year-on-year, but not as drastic as might have been expected. This was, in large part, a tribute to the way in which the industry – with the support of employees, unions and the DMRE – got back to work, safely and sooner than most other industries.
“Aligned with employment is compensation. Every job in our sector supports two downstream jobs, and every employee supports between five and 10 dependents. The investment becomes even more critical if between 2 and 4 million South Africans depend on the viability of our industry. For many companies in the sector, employees were paid during lockdown, both with the support of the Temporary Employment Relief Scheme and even beyond that. Nonetheless, our current estimates are that employee compensation declined by around 9.7% year-on-year, partly as a result of reductions in employee numbers, but also as a result of lockdown production losses, said Langenhoven.
“The industry has displayed resilience in the face of this crisis. Comparing the response to the COVID-19 pandemic with that of the 2008 global financial crisis (GFC), the GFC impact was not as deep as COVID-19 with the period to recovery significantly shorter by almost two years.”
“The future is less certain, and the ability of the industry to sustain jobs is going to depend on whether the industry can attract sustaining and growth capital.”