JOHANNESBURG, June 7 (ANA) – The Chamber of Mines said on Wednesday that the positive seasonal contribution of mining to the economy masked the current precarious position of the South African mining sector and “very concerning” underlying trends.
Statistics South Africa reported on Wednesday that the mining sector’s performance during the first quarter of 2017 was slightly better than the first quarter of 2016, contributing 12.8 percent to the GDP.
Chamber of Mines chief economist, Henk Langenhoven, said digging deeper into these numbers revealed very concerning trends.
“On the face of it, positive international macro-economic trends over the last few months (or even the last year) should have had a positive outcome for the mining sector. The global economy seems to be on the mend, albeit slowly,” Langehoven said.
“Commodity prices seemed to have bottomed out and some have started to improve. The rand commodity price index improved by over 20 percent during the first quarter of 2017.
“But, employment numbers are not improving, and we know that virtually no new investment is taking place. In fact, 2016 gross and net fixed investment showed strong declines. So the potential positive impact of mining improvements on the economy have not materialised.”
Langehoven said, instead, quarter-on-quarter value-add by mining declined, the cost of employment is declining, gross operating surplus declined over the same period, and there was virtually no net investment in the first quarter of 2017.
“These dynamics show the uncertainties faced by South Africa’s mining industry. It is particularly telling that the improved performances of both agriculture and mining were driven by exogenous factors over which neither domestic economic policies nor any endogenous demand factors had any influence,” Langehoven said.
“Sadly, all indications are that this recession is of South Africa’s own making. Even the correlation between South Africa’s downgrades and the government’s debt-to-GDP ratios testify to the broader truth of this statement.
“Continued mining policy uncertainty and allegations of regulatory malfeasances within the minerals regulatory authority will continue to undermine recovery.”
– African News Agency (ANA)
