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mining industry trends south africa

Mining Industry Trends in South Africa 2023

Marthinus Havenga | South Africa | 12 December 2023

Mining Industry Trends in South Africa 2022

Marthinus Havenga | South Africa | 26 July 2022

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Report coverage

This report on trends in the mining industry includes information on the industry’s contribution to the economy, production, sales and exports, commodity prices, industry performance and issues and developments such as mineral resource depletion, critical metals for energy transition, employment and productivity and safety. This report provides an overview of trends in the mining sector at a macro level. More information on the underlying industries and their players, are contained in separate reports published by Who Owns Whom.

Report coverage

This report on trends in the mining industry includes information on the industry’s contribution to the economy, production, sales and exports, commodity prices, industry performance and issues and developments such as mineral resource depletion, critical metals for energy transition, employment and productivity and safety. This report provides an overview of trends in the mining sector at a macro level. More information on the underlying industries and their players, are contained in separate reports published by Who Owns Whom.

Introduction

• The mining sector provides materials essential for all sectors of the economy and creates employment, investment, government revenues and infrastructure.
• Recent growth came on the back of record commodity prices.
• The pandemic and invasion of Ukraine played an important role in supporting higher commodity prices from 2020 to 2022.
• With the exception of gold, commodity prices decreased in 2023.
• The fiscus is benefitting from tax, royalties, PAYE and transfer duties.
• Challenges include rising input costs, safety, and rail and port logistics constraints.

Trends

• Certain commodities needed for the green transition will become in higher demand.
• Commodity prices are softening after a three-year run.
• Cost pressures in the mining industry are largely driven by above-inflation increases.
• Labour productivity is on the decline.
• Mining production has declined since the global financial crisis.
• Mining shares have been outperforming the rest of the market over the longer-term.
• South Africa faces a depletion of its mineral reserves in the near future.
• South Africa’s mineral wealth is predominantly destined for exports markets.
• The mining industry remains an important contributor to the South African economy.

Opportunities

• Circular economy opportunities (reducing, reusing, recycling).
• Explore and develop new mineral deposits and expand existing mines.
• New technology and innovation.
• Producers investing in R&D and innovation to extend the life of mines.
• SME mining development.
• Social development of rural areas that enhances industry stability.
• The demand for certain commodities could rise on the back of creating a carbon-neutral environment.

Challenges

• China’s impact on global commodity markets (e.g. economy slowing down).
• Commodity price fluctuations.
• Electricity and water supply.
• Environmental activism (e.g. opposition to coal mining).
• Illegal mining.
• Material input cost increases (mining at depth, wages, electricity, fuel). Above-inflation administered price increases are specifically problematic.
• Resource nationalism.
• Substitution of mineral products by other mineral and non-mineral products.

Outlook

• The World Bank projects that base metal prices will fall 5% in 2024 due to slowing demand and rebound by about 6% in 2025.
• In the medium- to longer-term the minerals and metals industries will play a growing role in creating a carbon-neutral environment.
• Metals that play a role in renewable energy will be in demand, resulting in higher prices.
• Prolonged disruptions to energy markets can raise production costs of energy-intensive metals such as aluminium and zinc.
• Heightened geopolitical risk could lead to much higher gold prices.
• In an environment where government provides policy certainty, administered prices are tolerable and logistics problems are solved, the mining industry can retain its historical importance in the economy.
• However, over the short-to medium-term these challenges will remain.

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Mining Industry Trends in South Africa
Mining Industry Trends in South Africa 2023

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Mining Industry Trends in South Africa 2022-07-26

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Table of Contents

[ Close ]
PAGE
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Geographic Position 2
2.2. Size of the Industry 3
2.3. Key Success Factors 5
3. LOCAL 10
3.1. State of the Industry 10
3.2. Trade 24
3.3. Industry Performance 32
4. MINERAL RESOURCE DEPLETION 36
5. CRITICAL METALS FOR ENERGY TRANSITION 38
6. INFLUENCING FACTORS 40
6.1. COVID-19 40
6.2. The Russia-Ukraine War 40
6.3. The Israel-Hamas War 41
6.4. Economic Environment 41
6.5. Labour 42
6.6. Mining Safety 47
6.7. Illegal Mining 48
6.8. Government Regulations 51
6.9. Input Costs 51
7. COMPETITIVE ENVIRONMENT 52
7.1. Competition 52
7.2. Barriers to Entry 54
8. INDUSTRY SUMMARY 55
9. OUTLOOK 56
10. INDUSTRY ASSOCIATIONS 56
11. REFERENCES 57
11.1. Publications 57
11.2. Websites 58
Appendix 1 – South Africa’s Contribution to World Mineral Reserves, 2022 59

Introduction

• The mining sector is an important contributor to South Africa’s economy and to economies around the world as a supplier.
• It provides materials essential for all sectors of the economy and creates employment, investment, government revenues and infrastructure.
• Output exceeded R1tn for the first time in 2021 on the back of record commodity prices.
• The pandemic and invasion of Ukraine are playing a role in supporting high commodity prices.
• The growth in employment numbers in 2021 is notable.
• Increases in input costs and rail and port logistics constraints are preventing the country from maximising its export earnings potential during a commodity boom.

Strengths

• Abundant mineral resources.
• Built on operational efficiencies, some mines are among the lowest cost producers in the world.
• Industrial and economic infrastructure.
• Mining culture built on more than a century of mining.
• Some of the mines have a long expected lifespan.
• South Africa’s strategic location between the Atlantic and Pacific markets is favourable for exports to either market.
• Strong global demand for minerals and resultant high commodity prices.
• Use of mining technologies.
• Well established, large mining houses.

Weaknesses

• Ageing infrastructure of certain mines.
• Extreme opposition by environmental groups.
• Failing logistics infrastructure (especially rail and ports).
• Finite resource / mine life.
• Regulatory constraints potentially inhibits investment.
• Shortage of skills in certain disciplines.
• The increasing depth of gold and platinum mines, making extraction more dangerous and expensive.

Opportunities

• Circular economy opportunities (reducing, reusing, recycling).
• Explore and develop new mineral deposits and expand existing mines.
• New technology and innovation.
• Producers investing in R&D and innovation to extend the life of mines.
• SME mining development.
• Social development of rural areas that enhances industry stability.
• The demand for certain commodities could rise on the back of creating a carbon-neutral environment for the future.
• The sector has the ability to be a driver of poverty and inequality reduction.

Threats

• A material and prolonged drop in commodity prices.
• A strong appreciation of the rand.
• China’s impact on global commodity markets (e.g. economy slowing down).
• Commodity price fluctuations.
• Electricity and water supply.
• Environmental activism (e.g. opposition to coal mining).
• Illegal mining.
• Impact of geo-political and global socio-economic events (e.g. Russia/Ukraine war and COVID-19).
• Material input cost increases (mining at depth, wages, electricity, fuel). Above-inflation administered price increases are specifically problematic.
• Resource nationalism.
• Substitution of mineral products by other mineral and non-mineral products.

Outlook

• The short- to medium-term outlook for the mining sector is positive.
• Commodity prices are expected to increase further in the second half of 2022, before growth slows down.
• Prices will remain at elevated levels for the foreseeable future.
• In the medium- to longer-term, metals used for renewable energy will be in high demand, resulting in price increases.

Mining Industry Trends in South Africa
Mining Industry Trends in South Africa 2022

Full Report

R 9 500.00(ZAR) estimated $527.07 (USD)*

Historical Reports

Mining Industry Trends in South Africa 2023-12-12

R 20 000.00(ZAR) estimated $1109.62 (USD)*

View Report Add to Cart

Table of Contents

[ Close ]
PAGE
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Geographic Position 2
2.2. Size of the Industry 3
2.3. Key Success Factors and Pain Points 4
3. LOCAL 8
3.1. State of the Industry 8
3.2. Trade 23
3.3. Industry Performance 30
4. INFLUENCING FACTORS 34
4.1. COVID-19 34
4.2. The Russia-Ukraine War 34
4.3. Economic Environment 35
4.4. Labour 36
4.5. Safety at Mines 41
4.6. Illegal Mining 42
4.7. Government Regulations 44
4.8. Input Costs 45
5. COMPETITIVE ENVIRONMENT 46
5.1. Competition 46
5.2. Barriers to Entry 48
6. SWOT ANALYSIS 48
7. OUTLOOK 49
8. INDUSTRY ASSOCIATIONS 50
9. REFERENCES 51
9.1. Publications 51
9.2. Websites 52
Appendix 1 – South Africa’s Contribution to World Mineral Reserves, 2021 53