South Africa’s mineral production achieved record values in 2021, exceeding R1-trillion for the first time, buoyed by strong commodity prices and giving the domestic economy a vital injection of higher taxes, wages and increased employment.

This is according to industry body the Minerals Council South Africa’s ‘Facts and Figures 2021’, a yearly publication that provides in-depth data and insights into the status and performance of the mining industry and its contribution to the economy.

The performance of the mining industry after two years of disruptions caused by the Covid-19 pandemic played a critical role in stabilising South Africa’s economy, which had slowed under lockdown conditions, and it injected capital into the fiscus, allowing the government to support millions of people with a basic income grant, the report notes.

“The importance of mining for the South African economy cannot be understated. The Facts and Figures publication shows just how critical mining is for the country, the broader economy, the fiscus and the labour market,” says Minerals Council CEO Roger Baxter.

“The industry increased employment during 2021, a rare occurrence for a major economic sector in the prevailing climate, more than offsetting the jobs lost in 2020, mainly because of Covid, and adding additional jobs to the economy,” he adds.

The value of production was just below R1.2-trillion in 2021 – well above the R910-billion achieved in 2020.

The boost in value was a result of improved commodity prices, which were 40% higher year-on-year in dollar terms and 20% higher in rand terms.

A 12% firming of the rand against the dollar meant mining companies did not reap the full benefit of international commodity prices, the report indicates.

The Minerals Council says it remains concerned about rail and port constraints, which it estimates resulted in an opportunity cost of R35-billion for 2021 based on railed tonnages compared with rail operator Transnet’s targeted tonnages.

If the capacity of the rail network for bulk commodities like iron-ore, coal and chrome is considered, the opportunity loss is R50-billion, a third of which would have flowed into the fiscus, the Minerals Council points out.

“While mining companies did extremely well financially, there are underlying challenges which are demanding our full attention. We are working closely with Transnet to address the constraints that are preventing South Africa Inc from fully benefiting from high commodity prices and strong demand for our minerals,” says Baxter.

Another area of concern to the Minerals Council is that mineral production by volume has not increased significantly and that costs continue to accelerate faster than inflation.

While the past few years have proved an exception, price increases have generally outpaced commodity price improvements. The price drivers have been items like electricity and fuel, it points out.

Although production has recovered by 11% from the low base in 2020, the 20-year index of mining production shows that sector production has not recovered since the 2000 to 2006 peak and is struggling to maintain 2015 levels.

In 2021, the mining industry’s direct contribution to gross domestic product grew by 36% to R481-billion, and the percentage contribution of mining to the economy improved to 8.7% from 7.1%.

The industry employed 458 954 people, paid employees R154-billion and contributed R27-billion to pay as you earn on behalf of employees.

It also paid corporate income tax of R78-billion, R15.4-billion in value-added taxes and R28-billion in royalties.

The industry also exported R842-billion worth of minerals.