After a rollercoaster 2018, it’s nice to look ahead and be optimistic about South Africa and the mining industry. The road ahead looks more focused on improving growth and stimulating an industry that has taken abuse over the last couple of years.
The industry has seen considerable improvement towards the end of 2018, due to bulk commodity producers. Commodities such as iron ore, coal, manganese, and chrome were the top bulk producers and experienced stable commodity prices through 2018. The gold and platinum sectors were not so fortunate. Increases in costs and continual production challenges saw the sector record a net loss for 2018. One positive aspect to note is that the industry saw capital expenditure grow for the first time since 2012.
The mining charter made headlines throughout the year, and with the new mining charter came more regulatory uncertainty. The initial draft received a substantial amount of backlash from the industry, forcing the government to rethink their approach. Subsequently, a new minister was appointed in February. The new minister opened the channels for communication between the government and companies, with the aim of coming together to reach common goals and objectives. There was a strong push to improve environmental regulatory changes.
Some of the key changes are:
- 30% black ownership
- Improved carried interest (CI) for employees and host communities
- And, 20% black female representation
A month into 2019 we can already notice changes in the mining industries outlook and objectives, with the major theme being mechanisation and digitization of the mining operation. This will help reduce labour risks and give the mine the ability to manage production and be proactive to any changes in commodity prices, striking staff and any other factors that may affect output.
Goldman Sachs’ Colin Coleman predicts South Africa’s economy to grow around 2.8% in 2019, while the world bank has been more hesitant with a 1.3% growth rate projection. In June 2018 the world bank predicted a 1.8% growth rate, but due to challenges in mining production, low business confidence, and policy uncertainty, that number contracted slightly.
A major forecaster of where the industry is going in 2019 will be the annual, Investing in African Mining Indaba, held in Cape Town. Here we can expect industry leaders and companies alike to be discussing the prospects of the 2019 year ahead. With over 7000 people in attendance, there will be a buzz about the potential South Africa and Africa hold for investors, mining executives and decisions makers.
Visit our Mining Indaba 2019 Event Page
