the south african mining industry
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The South African Mining Industry. ANGLOVAAL MINING LIMITED CEO’s evening : 2 November 2000. MINING IN SOUTH AFRICA. Exceptional geological deposits Political transition after 1990 Modernise the industry Result: leaner, more focused, more competitive and - PowerPoint PPT PresentationTRANSCRIPT
The South African Mining Industry
ANGLOVAAL MINING LIMITEDCEO’s evening : 2 November 2000
ANGLOVAAL MINING LIMITEDCEO’s evening : 2 November 2000
• Exceptional geological deposits
• Political transition after 1990
• Modernise the industry
• Result: leaner, more focused, more competitive and internationally active industry
• Major transformation challenge remains
MINING IN SOUTH AFRICA
• Continues to be a highly successful cluster in South African economy
• Most major minerals have experienced long-term growth • Mining is a significant contributor to employment creation,
rural economies and regional (SADC) development
• Hidden inside SA’s aggregate mining statistics are large, expanding industries
• Production: coal, PGMs and chrome sectors have doubled in size since 1980
• During the same period, mining other than gold, grew faster than the rest of the economy
• World-class support industries (electricity, chemical, engineering)
MINING INSOUTH AFRICA
Large, expanding industries
MINING IN SOUTH AFRICA
0 10% 20% 30% 40% 50% 60% 70% 80%
Phosphate rock
Zinc
Iron ore
Nickel
Coal
Antimony
Uranium
Fluorspar
Zirconium minerals
Vermicullte
Titanium minerals
Alumino-silicates
Gold
Vanadium
PGMs
Chrome ore
Manganese
Reserves
Production
South African reserves and production in key minerals 1998 (% of world)
Source: Chamber of Mines
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(8)
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• Mining and related beneficiation accounts for over half of
SA’s exports
• Mining remains the most important earner of foreign exchange
• Growth in manufacturing exports is based on mining activities
MINING INSOUTH AFRICA
60% of South Africa’s exports
Beneficiation process % of productionbeneficiated
% of exportsbeneficiated
Antimony concentrate to antimony troxide 65 80
Chrome ore to chromium alloys 57 71
Copper concentrate to copper metal 92 89
Iron ore to iron and steel 30 15
Manganese ore to manganese metal and 49 43alloys
Nickel matte to nickel metal and sulphate 100 100
Phosphate concentrate to phosphoric acidand phosphatic fertilisers
52 37
Zinc concentrate to zinc metal 100 100
MINING IN SOUTH AFRICAExtent of beneficiation
Diamond sorting/valuing to cutting/polishing 100 52
Composition by sector ofSouth African export earnings
Sector Average for decade1970s 1980s 1990s
Agriculture & forestry 6,9% 3,5% 4,2%Mining 54,0% 61,3% 40,9%Manufacturing 24,6% 23,6% 40,3%Electricity, gas & water 0,1% 0,1% 0,1%Services 14,4% 11,5% 14,3%
MINING IN SOUTH AFRICA
MINING INSOUTH AFRICA
Export destinations for SA’sprocessed minerals
Source: Minerals Bureau
Europe38%
Pacific Rim Countries
25.8%
MiddleEast 4.8%
North and Central America
28%
South America2.5%
Africa 1%
Percentage contribution to GDP by sector:1975 - 1998
Sector 1975 1980 1985 1990 1995 1998
Agriculture, forestry & fishing 5,4 5,7 5,4 6,1 5,3 6,4Total mining 13,9 13,3 13,0 11,3 10,5 9,9Total manufacturing 30,1 32,8 29,4 29,6 29,3 28,3Electricity, gas & water 3,1 3,6 4,6 5,1 5,6 5,9Building & construction 6,3 5,0 4,4 4,0 3,4 3,3Services 41,1 39,6 43,2 43,9 45,9 46,3
MINING IN SOUTH AFRICA
• Mining / manufacturing is inter-related
MINING INSOUTH AFRICA
Contribution to mining GDP, 1998
Source: SA Reserve Bank
Coal21%
GoldGold45%45%
Diamonds7%
PGMs27%
• Gross fixed capital formation continues to be significant
• Large portion of capital investment in SA over past decade has been into the minerals complex (Alusaf, Columbus, RBM, Saldanha Steel, Sasol, etc)
• For five million South Africans, mining is the principal ally against poverty
• Latest census - one in seven men with a formal sector job in 1996 employed in mining industry
• Mining industry is the conduit for money and opportunity to some of the poorest areas in Southern Africa
MINING INSOUTH AFRICA
Principal ally against poverty
• 1996 population census - more than one sixth of the
aggregate income of wage earners is derived from mining in 56 magisterial districts
• These 56 districts are SA’s “mining nation”
• These areas include poor rural districts from which mine workers are recruited.
• Total population of these areas is 5,7 million: on average, more than a quarter of all income earned by men is earned from mining
MINING INSOUTH AFRICA
Principal ally against poverty
Principal ally against poverty
MINING IN SOUTH AFRICA
Per cent of all i ncome
Less than 4 %4% to 8 %8% to 16 %16 % to 32%More than 32 % 400 0 400 800 Kilometers
Kriel
Rustenburg
OberholzerJohannesburg
Proportion of workers at various formal education levels
MINING IN SOUTH AFRICA
Source: Chamber of Mines
New mine workers
85 90 95 98
Matric
Less than primary
30%
20%
10%
0%
MINING IN SOUTH AFRICAEmployees on Chamber of Mines gold mines
Source: Chamber of Mines
95,000
90,000
85,000
80,000
75,000
20,000
15,000
10,000
5,000
0
1970 1980 1990 1998
Unskilled wages
Skilled wages
Ski
lled
wag
esR
an
ds
pe
r a
nn
um
Un
skill
ed w
ages
Ra
nd
s p
er
an
nu
m
Contribution of direct taxes to the government revenue (per cent of total revenue)
Sector 1970s Average
1980sAverage
1990sAverage
Coal 0,29 0,52 0,60*Gold & uranium 10,02 12,51 1,13Diamonds 1,45 0,56 0,09
MINING IN SOUTH AFRICA
* 1990’s figure includes coal and other mining
• Over last 20 years, two major economic shortcomings
have forced African economies to depend on multilateral aid agencies:
1. Owing to inability of governments to generate tax revenues, African countries have saved at less than half the rate of other developing countries.
cont….
MINING INSOUTHern AFRICA
Key to economic development
2. With limited exports, less foreign exchange to
purchase machines and computers required for export-led growth.
• Root cause of this: political instability, weak institutions, poor policies
• Mining can play a critical role in Africa’s economic renaissance
MINING INSOUTHern AFRICA
Key to economic development
South Africa
BotswanaBotswana
Namibia
Tanzania
Zambia
Zimbabwe
Moz
ambi
que
Key to economic development
in southern Africa
MINING INSOUTHern AFRICA
Recent mining FDI* in selected SADC countries 1995 - 1999 (US$ millions)
Country 1998 1995 – 1999Totals
Mozambique 8 20Namibia 10 59Tanzania 48 297Zambia 162 405Botswana 250 400Zimbabwe 544 577Totals 1 022 1 758
MINING IN SOUTHern AFRICA
Source: Business Map/SACS - FDI database FDI : Foreign direct investment
• SA mining companies are leading the resurgence of mining activity in the region
• Extensive African exploration is underway
• Johannesburg may reclaim position as global centre of mining technology, specialist services and supplies
• It is estimated that half of investment made in large-scale projects in southern Africa is returned to SA through purchase of services and supplies
MINING INSOUTHern AFRICA
South Africa is well positioned
• SA provides sophisticated inputs and services to the global mining industry
• SA firms have become globally prominent in three areas:
1. Technology providers
2. Providers of knowledge- based mining services
3. Specialist mining contractors
MINING INSOUTH AFRICA
South African firms are at the centre...
MINING INSOUTH AFRICA
• The contribution of mining to the economy must be seen as coming not only from mining operations, but also from upstream and downstream activities and the huge multiplier effects the industry has at economic, social and political levels
• Mining represents the most successful “cluster” in SA’s economy
Conclusion / looking forward