Challenges galore, but still room for optimism about SA mining – KPMG
ALIVE WITH OPPORTUNITIES There is still room for optimism about the future and opportunities for South Africa’s mining sector
JACQUES ERASMUS Mining executives are still focussed on ensuring that the fundamentals are secured and managed at their mining companies
An uncertain regulatory framework, weaker commodity prices, increased working costs, constrained infrastructure and high labour costs, coupled with poor levels of productivity and strained labour-management relations – these are some of the challenges that have placed South Africa’s mining industry in “dire straits”.
This is according to professional services firm KPMG’s mining risk survey, entitled ‘Settling the Dust in South African Mining’, which was launched last week.
KPMG Southern Africa mining head Jacques Erasmus explains that the survey came about following the firm’s hosting of the first Mining Executive Forum in South Africa in September 2015.
He says that, following 11 successful KPMG Mining Executive Forums held in Canada, the inaugural Africa version of the forum was held in Johannesburg under the theme ‘Fit for Future’ to unpack challenges and provide a platform for stakeholders to discuss tangible and credible long-term solutions and benefits for the local mining industry.
From the forum, KPMG conducted a mining risk survey with over 80 mining company executives attending the two forums.
Erasmus tells Mining Weekly that, despite the fact that South Africa is not in the best place from an economic perspective and is fraught with political issues and industrial challenges, there is still room for optimism about the future and opportunities in the country’s mining sector.
“The long-term economic fundamentals of the industry are still strong. For thousands of years, mining has been the key engine propelling the development of civilisation and mining is still important in this technically advanced global community,” Erasmus asserts.
He states that, when making comparisons between the South African and North American surveys, results highlight how different perceptions can be between regions in a global industry and how much the stability of the local economy impacts on the risks which executives focus on.
Erasmus notes that, while six of the top ten risks between the two regions overlapped, they appeared in a very different order and there were some major differences.
“In Canada and South Africa, the survey results reinforce the importance of having a robust enterprise risk management process that identifies emerging risks to deal with a complex web of issues at company level,” he states.
Erasmus points out that the top risks once again highlight the challenges that the African, and more specifically the South African, mining industry finds itself in.
“The fact that African executives are still facing challenges linked to emerging economies is not surprising and it is something that we expect to see for several years. It does, however, illustrate the importance of collaborative engagement between mining companies, government and labour,” he says.
Erasmus adds that the survey results also reveal that mining executives are still focused on ensuring that the fundamentals are secured and managed at their mining companies.
He also notes that the survey results of KPMG Canada’s 2015 Mining Executive Forum, in North America, suggest that executives may be starting to look toward the future, even though external business conditions, such as the global economy, commodity prices and equity markets, remain volatile.
“Despite the current economic state of the mining industry and the numerous challenges surrounding this, even the toughest analysts are confident that the industry will come out on the other side of this crisis.
“However, for the industry to bounce back sooner rather than later, there needs to be changes, and now is the best moment possible, as mining companies can decide the tone of the future. They can decide if they will change the world for permanent good, not on the back of failures, but on the determination of executive leadership,” the survey concludes.
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