South African mining production breached R1 trillion for the first time last year on the back of strong commodity prices, the Minerals Council South Africa said on Monday.
The council announced the record result when it published its annual Facts and Figures report ahead of the start of the Investing in African Mining Indaba which takes place in Cape Town this week.
The value of production was just shy of R1.2 trillion in 2021 and 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 production value provided the domestic economy with a vital injection of higher taxes, wages, and increased employment, the council CEO Roger Baxter said in a press briefing.
“The importance of mining for the South African economy cannot be understated [and it is critical] for the country, the broader economy, the fiscus, and the labour market,” he said.
“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.
“The council however highlighted its concern around key state-owned enterprises like Eskom and Transnet. It estimates that rail and port constraints resulted in an opportunity cost of R35 billion for 2021. 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.
“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 SA Inc from fully benefitting from high commodity prices and strong demand for our minerals,” said Baxter.-fin24
