https://www.miningweekly.com

Mining industry is ‘basically bust’ – Bristow

10th February 2015

By: Kim Cloete

Creamer Media Correspondent

  

Font size: - +

CAPE TOWN (miningweekly.com) – The mining sector is in a sorry state even at current prices and cannot be seen as a viable industry unless it undergoes a major reinvention, says Randgold Resources CEO Mark Bristow.

“The harsh reality is that the mining sector has inflicted debt and write-downs on itself without making provision for its long-term future,” he told delegates at the Mining Indaba, in Cape Town, on Tuesday.

In a sobering address, Bristow said the industry’s ability to contribute to Africa’s transformation had been handicapped by its short-term culture, which had been an unfortunate legacy of the boom years.

While the industry was grappling, African countries were revising their mining codes to increase their share of revenue.

“They are demanding more money from an industry that is basically bust.”

Bristow suggested that a mutually profitable partnership between African governments and mining companies was the only way to secure mining’s future as a creator of real and lasting value.

“This should not be focused on the next quarter or the next term of office, but as a sustainable industry capable of rewarding stakeholders.”

He said Africa was poised to establish itself as a major emerging region, capable of becoming the global economy’s key driver.

“To achieve that outcome, we need to be honest and open about the obstacles, and agree to cooperate and capitalise fully on the opportunities within our grasp.”

Bristow said commodity prices had been on a roll since the last market correction in 1999. Ten years up to 2011 saw the longest bull run in the history of the gold price. Since then, he said, there had been a marked downturn in gold, copper and iron-ore prices, but these had come off a very high peak.

“These prices are still much higher than they were two decades ago. Most of us have lived through an unprecedented boom in the gold and commodity markets since the turn of the century.”

However, the mining industry had not done well in storing up wealth during this “time of plenty”, he asserted.

“At the peak of the boom, the market value of the mining sector was $2.3-trillion. Today, it is worth less than half of this…a golden opportunity to create lasting value has been missed. We cannot afford to let that happen again.”

He added that many mining companies had spent a lot of money with little or no return.

Meanwhile, he pointed out that Africa’s economic growth rate for the next five years was forecast to be 7.7%– double that of the world’s most advanced economies. Eight of the continent’s fastest growing economies were not dependent on oil or mining.

While Africa offered much promise, three substantial barriers to economic growth remained – inadequate energy provision; a skills base that was still too small; and an unpredictable political environment.

“The only thing we can be certain about is uncertainty. The commodities price situation is simple. It is going to remain volatile for the foreseeable future,” stated Bristow.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION