South Africa miners are facing the highest rise in costs in three years, as the annual input cost escalation in the South African mining industry increase to 8.58 per cent on a year-to-date basis.
This is compared with an annual average input cost escalation of 8.26 per cent in 2019 and 8.67 per cent in 2018.
This was according to figures from Statistics South Africa, the South African Reserve Bank and the Minerals Council South Africa in a joint publication titled: ‘Facts and Figures 2020 Book’
“Due to the weak South African economy, both production price and consumer price escalation declined during the last few years, which had a positive impact on mining.
“However, domestically, rapidly rising administered prices remain a major challenge jeopardising viability, and the weakening exchange rate pushes imported machinery and equipment prices higher.”Facts and Figures 2020 Book
The Minerals Council South Africa opined that the mining sector had contributed R371.6 billion to GDP in 2020, which is R10.0 billion above the R361.6 billion previously recorded in a release in February 2021.
Furthermore, the Council noted the better commodity prices and less-than-expected contraction of world demand during the COVID-19 crisis resulted in the value of exports growing at a ‘surprising rate’, ending at an estimated 24 per cent higher in 2020 than in 2019.
“This compensated for lower physical production (-12%) and exports (-4.5%) during 2020,” the Council underscored.
Roger Baxter, Chief Executive Officer of the Minerals Council South Africa noted:
“The negative impact on mining was lighter than that compared to many other parts of the economy due to the excellent cooperation and collaboration between the industry and government in getting the sector safely back to work as quickly as possible [after the nationwide lockdown in 2020].”Roger Baxter, CEO Mineral Council South Africa
Mineral Sales, Taxes and Royalties Rise
Also, mineral sales during the period rose to R609.8 billion in 2020 from R552.4 billion in 2019. Companies in the industry paid R34.7 billion in value added taxes and R11.8 billion in royalties. “Many mining companies recorded increased revenues and profits, thanks to higher commodity prices and a weaker Rand.”
The Minerals Council South Africa averred that there had been 60 fatalities in 2020, which it described as “a disappointing regression”. The industry had the lowest number of fatalities on record in 2019 of 51.
“The minerals council reiterates its commitment to zero harm as we work tirelessly with government and organised labour to improve the industry’s safety and health performance.”Roger Baxter, CEO, Mineral Council South Africa
Employment levels in the industry dip by 2%
The number of people employed in the industry fell from 462,039 in 2019 to 452,866 in 2020, the council opined.
“It is gratifying that, notwithstanding the terrible impact of the pandemic and other adverse economic factors on employment in the country, our industry managed to hold job losses to less than 2%,” Baxter said.
The workforce has since shrunk slightly about 450,000, according to separate council figures released last week.