Disruptions brought about by the onset of the Covid-19 pandemic in South Africa early last year resulted in the mining industry being the largest contributor to economic decline with its negative growth of 21.5%, Minerals Resources and Energy Minister Gwede Mantashe said on May 18.
Presenting his budget vote speech, he said the South African economy experienced its worst economic recession on record in 2020.
“This was [also] the biggest slump in the past six years in the sector and was attributed to supply and demand disruptions as a result of hard lockdown . . . The second quarter saw a sharp economic decline at 51% with mining contracting by 73.1%.”
However, during the lockdown, Mantashe said, the Department of Mineral Resources and Energy (DMRE) had developed a number of interventions to help revive the economy.
Among these interventions were the DMRE’s permitting of all coal mines and refineries to continue operating at 100% during Alert Level 5 to avoid a shortage of coal supply to power utility Eskom and to enable continued supply of energy into the economy.
Not doing so, would have “plunged the country into darkness”, he said.
In addition, during Alert Level 4, the DMRE permitted all opencast mines to operate at full capacity, while the remainder of mines were permitted to operate in a phased approach, while beneficiation plants operated at full capacity with stringent health and safety measures in place to ensure the protection of livelihoods while saving lives at Alert Level 3.
The outcomes of these interventions manifested in improvements in gross domestic product (GDP) in the third quarter of 2020, with GDP readings registering a recovery of 66.1%, indicating a softer contraction of 6%.
Further, in the third quarter, Mantashe says mining and quarrying registered a growth rate of 288%, contributing 11.8 percentage points to the overall GDP.
This made mining and quarrying the third-largest contributor to GDP during the third quarter.
“We are pleased with . . . positive signs that mining is showing in our economy as it registered a 21.3% year-on-year growth in March, following 0.8% year-on-year growth in February.”
He added that, sales of minerals increased by 46.9% in March, following a 25.4% increase in February.
“This performance is a confirmation that mining remains the bedrock of our economy and that our interventions are yielding great results in the economic reconstruction and recovery journey.”
However, although international resource prices are higher than they have been for the past nine years, the South Africa mining sector is still being hampered by an environment that is not friendly to investors, opposition party the Democratic Alliance MP James Lorimer said during the debate on the DMRE's budget.
He said the effect of global prices concealed rather than revealed what was happening in South African mining. This was evident through 42 new mining companies having listed on the ASX and 28 in Canada; yet none have listed in South Africa in the past 12 months.
“One of the prime dissuaders of investment is the onerous prescriptions of the Mining Charter. We are awaiting the court judgment on [some aspects of Mining] Charter 3,” said Lorimer.
Further, he said the government’s idea that a mining right renewal must be treated as an entirely new application and go through an entirely new empowerment process was “laughable”.
Lorimer questioned why other countries were benefiting from another mining boom cycle, which he suggested may even repeat the mining supercycle of the early 2000s. “We missed that supercycle, with our mining actually shrinking during that time. All evidence is, we’ll miss this one too.”
Lorimer said South Africa would fail in its ambitions to create new jobs and add revenue because “the African National Congress never learns and we still have bad policy badly implemented”.
He suggested that the government had to change policy and give the DMRE a job it was capable of doing. “Then it must ensure it does that job, otherwise an even bleaker future awaits.”
EXPLORATION AND HEALTH & SAFETY
Meanwhile, Mantashe said that, without exploration, mining was not sustainable, and that to address this issue, the DMRE was developing an exploration strategy to increase South Africa’s share of the global expenditure in the next three to five years.
He added that the Council for Geoscience had rapidly increased mapping coverage from below 5%, to almost 9% to date, with a particular focus on areas with the greatest potential for recovery of the world-class minerals needed to drive the contemporary economy.
In terms of health and safety, Mantashe said the occupational health and safety statistics show that 2019 remained the domestic mining industry’s safest year, with the lowest fatalities ever recorded at 51 incidents, and with no record of a mine disaster since 2016.
Nonetheless, he said 60 people died in mining incidents in 2020.
“Fall-of-ground accidents, including seismic-related rock bursts remain a significant challenge in the platinum and gold sectors, especially in deep mines; while transport-related accidents continue to mostly affect the coal and platinum sectors. We will continue to work harder towards the attainment of zero harm in our mines.”
Mantashe added that the number of occupational diseases, nationally, has also decreased from 1 052 cases in the first six months of 2019, to 498 cases during the same period in 2020 – mainly involving cases of noise-induced hearing loss, silicosis and tuberculosis.
In 2020, the mining industry also improved its injury statistics, with 1 747 injuries, compared with 2 452 injuries in 2019.
Meanwhile, he said it was with “delight” that the DMRE noted the mining industry's steps towards electricity self-generation, with Gold Fields to soon build a 40 MW solar photovoltaic plant at its South Deep mine.
“We are inviting all the mining companies that want to test their capacity to self-generate [electricity] to come forward,” he stated.