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  This is a systematic socialist program implemented by the ANC, started already back in the 90's, its only now that we started to notice and feel the impact, and we are not even full circle. All caught...  

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Just how bad are things in SA mining?

Average remuneration has nearly tripled, but jobs are evaporating….

Since the recent peak in 2012, the South African mining industry has been shedding – on average – at least 1 200 jobs per month, every month. Using annual figures from the Chamber of Mines’ Facts and Figures 2016 statistics publication released this month, it seems as if the trend has accelerated. In 2015, 16 700 jobs were lost in the sector (from ±14 500 in both prior years), while in 2016 that number spiked to 21 500.

However, there was improvement during 2016 on the back of better commodity prices. The Chamber says that “whereas 40 000 jobs were lost from the beginning of 2015 (more than 1 500 per month) this slowed at the end of 2016 to around 400 per month”.

Mining industry direct employment

2007

495 150

2008

518 729

2009

491 794

2010

498 906

2011

512 878

2012

524 632

2013

510 099

2014

495 568

2015

478 868

2016

457 332

* Source: Chamber of Mines

In total, however, 67 300 jobs have been lost in the sector since 2012. When measured by commodity, these declines have largely been across the board.

 

Gold

PGMs

Iron Ore

Copper

Chrome

Manganese

Diamonds

Coal

2007

166 064

186 410

13 857

4 241

9 796

3 239

19 471

60 439

2008

166 423

199 948

13 257

3 523

12 279

3 976

18 474

65 484

2009

159 926

184 162

13 728

3 366

10 966

5 003

11 601

70 791

2010

157 019

181 969

18 216

3 032

13 982

5 879

11 467

74 025

2011

144 799

194 745

22 360

3 237

16 911

7 460

12 047

78 580

2012

142 200

197 752

23 380

2 533

19 762

8 685

12 332

83 244

2013

131 738

191 260

21 127

2 930

18 358

9 842

13 579

88 039

2014

119 007

186 864

21 794

2 853

18 658

9 971

15 356

86 106

2015

115 055

187 756

20 760

2 805

18 470

8 657

17 481

77 773

2016

116 479

172 444

16 490

2 366

15 514

7 240

17 978

77 506

Employment in the gold and PGMs sectors make up nearly two thirds of total mining employment. The problem, of course, is that South African gold mining is in long-term structural decline. Barring the 1 500-odd jobs added between 2015 and last year, the numbers have been in freefall, along with production. A decade ago, with 166 064 employees, South Africa produced 10.1% (252.6 tons) of total global output. In 2016, that had dropped by 44% to just 4.4% (142.1 tons) of world gold production, which continues to decrease.

But, total employee earnings in the sector roughly doubled from R14.7 billion in 2007 to R28.5 billion in 2016. This means that the average annual remuneration per mineworker in the gold sector has nearly tripled over the decade from R87 354 to R246 665. Put another way, average pay has gone from R7 280 per month to R20 555. Mike Schüssler argued this point on Moneyweb in August last year: Some minimum salaries are higher than you think.

There have been similar increases in the PGMs sector. The average annual remuneration per mineworker has gone from R98 391 in 2007 to R266 036 last year. Average monthly pay is R22 170 (from R8 199). The Chamber says that employee earnings in this sector increased by an average of 16.4% per year between 2005 and 2016.

Across mining as a whole, the average annual remuneration per mineworker increased from R101 043 in 2007 to R262 553 in 2016.

Of course, these are averages, not the median. Using data from StatsSA, the Chamber notes that “between 2010 and 2015, employees in the mining and utilities industries were the top performing earners, with the largest nominal increases in earnings also recorded for these two sectors (R2 500 and R1 500 respectively)”.

 

Median monthly earnings of employees, by industry

 

2010

2015

Agriculture

R1 295

R2 231

Mining

R5 000

R7 500

Manufacturing

R3 250

R3 800

Utilities

R6 000

R7 500

Construction

R2 437

R3 000

Trade

R2 505

R3 100

Transport

R3 500

R4 000

Finance

R3 501

R4 000

Services

R6 000

R5 000

Private households

R1 000

R1 500

Total

R2 900

R3 100

The mining industry is very well paid, in comparison to others. But (and this is the big worry): we’re producing and exporting more (certainly in rand terms), but with fewer people.

In real terms, mining was 7.3% of total GDP in 2016, below the 8% average over the last decade. Primary mineral exports as a percentage of the total was at 21% in 2016, and as a percentage of merchandise exports, it was 28%. Both of these are below the averages over the past decade, of 23.8% and 32%, respectively.

When it comes to fixed investment, the picture is even scarier. The year-on-year growth rate declined by 1% in 2015 and 3.8% in 2016. But, in the absence of other meaningful increases in fixed investment elsewhere in the economy, mining’s contribution to gross fixed capital formation is at 18%, the highest it’s been since 2009-2011.

The Chamber cautions that “although gross fixed investment has declined by only about 1% on average since 2013, the fact that the sector is really in survival mode is reflected in a progressively worsening net investment trend: -2.5% in 2013, -0.4% in 2014, -10.5% in 2015 and a more than 100% contraction in 2016”.

* Hilton Tarrant works at immedia. He can still be contacted at hilton@moneyweb.co.za.

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Oh ja – And then after providing the highest median income the mines also have to provide free work clothing, housing, medical, life insurance, pension, and a 3 to 4 week holiday. And they claim poverty and strike for more!!

And on top of this our dear minister of Minerals (together with Zuma and Clan & the Guptas) decided in his wisdom this is not enough. They will go against the market and will make mining even less competitive and non-attractive for investors by adding additional red tape and making it near impossible to run a mine in South Africa.

It’s scary that the mining industry is not only ALREADY being brought to its knees, but some wise-ass/es saw fit to push through a new “Mining Charter” that will simply accelerate the decline. Mining shares have already reportedly lost around R50 BILLION since the revised charter was made public, and my understanding of the matter is that it will lead to even more churning of shares by those who qualify to buy more shareholding in the mines. It’s all about the quick money, folks. Nobody actually wants to WORK for it!

mining must be less of the economy – except it needs to be by growth of other sectors, not by cutting mining off at the knees like SA is doing to date. We’re in this mess because we’re too focussed on commodities and wealth re-distribution. We need new industries with wealth creation otherwise we’ll be in the middle income trap forever.

This is a systematic socialist program implemented by the ANC, started already back in the 90’s, its only now that we started to notice and feel the impact, and we are not even full circle. All caught asleep, under the blanket of democracy and inequality.

Slowly they are tilting the scale, one can only ask “who or what will be next on their hit list?” – Mining, JSE, White farms, White Capitol, the current banking sector – just to name a few that we can already tick. Scary times ahead…!

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