With the past decade being labelled the ‘lost decade’ in South Africa’s mining industry by various commentators, the need for intervention by all stakeholders in order to attract investment that will ensure a positive future for the sector has become critical, says professional services company KPMG.
“Market capitalisation in the mining industry has decreased by 30% in the past ten years. This [called] into question the sector’s level of competitiveness globally,” states KPMG energy and natural resources head Carel Smit.
He adds that, 25 years ago, South Africa contributed 39% to the world’s mining value chain; today, this is down to 5%.
“This raises the question of what went wrong in the mining sector and how then do we as a country look at ways in which we can regain global competitiveness,” says Smit, adding that, currently, South Africa is competing with about 180 democracies globally for investment.
He indicates that the mining sector contributes 9% to the country’s gross domestic product. Another 9% is contributed by the sector indirectly through growing other sectors that develop as a result of the existence of mining within a community.
As it plays such an important role in the country’s economy, Smit suggests that new ways of redeeming the sector and attracting investment into the country have to be evaluated.
Making reference to the recent Joburg Indaba, held in Sandton, he mentions that dialogue between policymakers, mine owners, unions, workers and professionals – as was the case during the Indaba – on how the sectors’ fortunes could be turned around for more positive results should take place.
“Such events create a platform in which various stakeholders can discuss their concerns about the sector and how they are affected by decisions taken, as well as comment on the state of the sector currently,” he states.
Being present during the Indaba, Smit notes that discussions around modernising the sector came up, which he feels will attract the younger generation. This, in turn, will allow the birth of new technological advancements, which will give the industry the opportunity to be globally competitive.
“We are at a crossroads in the South African mining sector [and] if we are to change anything, this will be the perfect time to do so. Considering changes, such as modernisation in mining, has the potential to revive the sector,” he suggests.
Smit also notes that, with the Department of Mineral Resources, through the leadership of Minister Ngoako Ramatlhodi, who is open to dialogue on ways in which the sector can be revived, policies that exist in the sector can be discussed and thoroughly evaluated to ensure that they are investor friendly.
Sharing the same sentiment, former Cabinet Minister Valli Moosa told Mining Weekly earlier this month that South Africa is at a point where the mining conversation is being taken seriously, following Ramatlhodi’s emphasis of the need for a cooperative approach towards issues pertaining to the sector.
Alluding to this, the African National Congress has indicated that, with such an approach, the industry should consider how all stakeholders – such as the mineworkers and community members around the mines – can build a successful future from mining activities. This would lead to less strike action by mineworkers, which would create an investor-friendly environment.