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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
internationally active industry
• Major transformation challenge remains
• 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
MINING IN
SOUTH AFRICA
Large, expanding industries
• 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 IN SOUTH AFRICA
South African reserves and production in
key minerals 1998 (% of world)
(1)
Manganese
(1)
Chrome ore
PGMs
(1)
Vanadium
(1)
Gold
(1)
Alumino-silicates
(1)
Titanium minerals
(1)
Vermicullte
(2)
Zirconium minerals
(2)
Fluorspar
(3)
Uranium
(4)
Antimony
(4)
Coal
(5)
Nickel
(5)
Iron ore
(8)
Reserves
Zinc
Production
Phosphate rock
0
10%
20%
Source: Chamber of Mines
30%
40%
50%
60%
70%
(6)
(9)
80%
MINING IN
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60% of South Africa’s exports
• 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 IN SOUTH AFRICA
Extent of beneficiation
Beneficiation process
% of production % of exports
beneficiated
beneficiated
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
alloys
49
43
Nickel matte to nickel metal and sulphate
100
100
Phosphate concentrate to phosphoric acid
and phosphatic fertilisers
52
37
Zinc concentrate to zinc metal
100
100
Diamond sorting/valuing to cutting/polishing
100
52
MINING IN SOUTH AFRICA
Composition by sector of
South African export earnings
Sector
Average for decade
1970s 1980s 1990s
Agriculture & forestry
Mining
Manufacturing
Electricity, gas & water
Services
6,9% 3,5% 4,2%
54,0% 61,3% 40,9%
24,6% 23,6% 40,3%
0,1% 0,1% 0,1%
14,4% 11,5% 14,3%
MINING IN
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Africa 1%
South America
Export destinations 2.5%
for SA’s
North and Central
America
processed
28%
minerals
Middle
East
4.8%
Europe
38%
Pacific Rim
Countries
25.8%
Source: Minerals Bureau
MINING IN SOUTH AFRICA
Percentage contribution to GDP by sector:
1975 - 1998
Sector
Agriculture, forestry & fishing
Total mining
Total manufacturing
Electricity, gas & water
Building & construction
Services
1975 1980 1985 1990 1995 1998
5,4
13,9
30,1
3,1
6,3
41,1
• Mining / manufacturing is inter-related
5,7
13,3
32,8
3,6
5,0
39,6
5,4
13,0
29,4
4,6
4,4
43,2
6,1
11,3
29,6
5,1
4,0
43,9
5,3
10,5
29,3
5,6
3,4
45,9
6,4
9,9
28,3
5,9
3,3
46,3
MINING IN
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Contribution to mining GDP, 1998
PGMs
27%
Diamonds
7%
Coal
21%
Gold
45%
• 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)
Source: SA Reserve Bank
MINING IN
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Principal ally against poverty
• 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 IN
SOUTH 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 IN SOUTH AFRICA
Principal ally against poverty
Rustenburg
Kriel
Johannesburg
Oberholzer
Per ce nt of all i nc o m e
Les s tha n 4 %
4% to 8 %
8% to 16 %
16 % t o 3 2 %
Mor e t h an 3 2 %
400
0
400
800 Kilometers
MINING IN SOUTH AFRICA
Proportion of workers at various
formal education levels
New mine workers
30%
20%
Less than primary
10%
Matric
0%
85
Source: Chamber of Mines
90
95
98
MINING IN SOUTH AFRICA
Employees on Chamber of Mines gold mines
95,000
90,000
15,000
85,000
10,000
Skilled wages
80,000
5,000
75,000
0
1970
Source: Chamber of Mines
1980
1990
1998
Rands per annum
20,000
Unskilled wages
Rands per annum
Skilled wages
Unskilled wages
MINING IN SOUTH AFRICA
Contribution of direct taxes to the government
revenue (per cent of total revenue)
Sector
Coal
Gold & uranium
Diamonds
1970s
Average
1980s
Average
0,29
10,02
1,45
* 1990’s figure includes coal and other mining
0,52
12,51
0,56
1990s
Average
0,60*
1,13
0,09
MINING IN
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Key to economic development
• 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 IN
SOUTHern 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 IN
SOUTHern AFRICA
Tanzania
Zambia
Zimbabwe
Namibia
Botswana
Key to economic
development
in southern Africa
South Africa
MINING IN SOUTHern AFRICA
Recent mining FDI* in selected SADC
countries 1995 - 1999 (US$ millions)
Source: Business Map/SACS - FDI database
FDI : Foreign direct investment
Country
1998
1995 – 1999
Totals
Mozambique
Namibia
Tanzania
Zambia
Botswana
Zimbabwe
Totals
8
10
48
162
250
544
1 022
20
59
297
405
400
577
1 758
MINING IN
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South Africa is well positioned
• 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 IN
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South African firms are at the centre...
• 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 knowledgebased mining services
3. Specialist mining contractors
MINING IN
SOUTH AFRICA
Conclusion / looking forward
• 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