With signs of a V-shaped economic recovery, economist Dr Roelof Botha says the surface mining industry will recover in line with hard lockdown’s ending and increased demand for building materials.
Speaking during a recent 250-member-attended webinar on behalf of surface mining industry association Aspasa, he announced the findings of the Afrimat Construction Index, which provided a snapshot of the surface mining, industrial and construction industries.
Botha revealed that nearly all major building and construction indicators showed a rapid V-shaped recovery, translating into rising demand for materials such as cement, sand, stone, dimension stone and other materials used in construction projects.
Afrimat is a broad-based supplier of construction and industrial minerals ranging from mining and aggregates, metallurgical dolomites, agricultural lime and concrete products to readymix products. It has also established a strong foothold in contracting services comprising drilling and blasting, mobile crushing and screening.
Underpinning the earlier sentiment of Afrimat CEO Andries van Heerden, that the company and the industry were in a strong position to grow, Botha said that, following the economic disaster caused by the pandemic, companies should not get drawn into managing the calamity that happened in April last year, but rather focus on recovery.
“The rand is recovering, bonds are bouncing back and the outlook is looking brighter by the day. Although the rand is expected to remain volatile, we expect it to continue strengthening as the pandemic tapers and comes under control.”
Botha added that fear factors, such as the gross domestic product to debt ratio climbing, are to be expected and were not unique. However, he said that, compared with many other countries, including some developed ones, South Africa’s situation is manageable and the fundamentals are in place to recover.
Botha explained that the V-shaped recovery in South Africa was not unique either, and was happening in several economies. “With increasing demand, commodity prices are also increasing in a V-shape recovery which spells good news for the mining industry.” He noted that it was also reflected in overall mineral sales, which were at all-time highs. “The same trend is reflected in retail and wholesale trades driven by construction materials, agriculture and resources.”
Further, and “fortunately”, Botha notes, the agriculture, services and the digital industries have been the saviours of the economy throughout the pandemic.
Taking these factors into account, he said government’s large-scale Covid-19 relief projects, in the form of 62 large infrastructure projects worth hundreds-of-billions of rands, in an attempt to kickstart the economy and provide work for tens of thousands of employees, were “good news”.
“The private sector in many instances can also not afford to continue delaying some large projects and these can be expected to come into fruition in the new year. Overall, a good position for surface miners to be in,” Botha concludes.