In 2021, for the first time ever, the value of production in the mining industry topped the R1 trillion mark, the Minerals Council of South Africa said on Monday, just as the Mining Indaba in Cape Town kicked off.
According to the council’s 2021 Facts and Figures book, SA’s mineral production achieved record values last year, coming in a little under R1.2 trillion – an improvement from the R910 billion reported in 2020.
It says the value of mining production received a boost from stronger commodity prices, which not only aided the industry’s contribution to the country’s economic recovery but also helped increase employment as the country continues to battle an unemployment crisis.
The council’s latest research report notes that the 2021 commodity boom, which saw commodity prices 40% higher year-on-year in dollar terms and 20% higher in rand terms, has seen the mining industry increase its direct contributions to gross domestic product (GDP) by 36% to R482 billion, up from the R353 billion reported in 2020.
“The importance of mining for the South African economy cannot be understated,” says Roger Baxter, CEO of the Minerals Council.
“The Facts and Figures publication shows just how critical mining is for the country, the broader economy, the fiscus, and the labour market,” he adds.
More jobs and tax revenues
The report says that the sector added over 6 000 more jobs to the economy in 2021, employing 458 954 people during the year, contributing R154 billion to employee remuneration and R27 billion to pay-as-you-earn (PAYE) on behalf of its employees.
“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,” Baxter comments.
Also benefiting from the rise in commodity prices was the South African Revenue Services (Sars) which received a much-needed tax boost from mining sector receipts.
During the period, the industry paid R78 billion in income taxes, double what it paid in 2020, the minerals sector also paid R15.4 billon in value-added taxes (Vat).
Mining safety slide
While it was a boom financial year for mining companies, the industry’s safety performance took a knock. According to the council, 2021 marked the industry’s second consecutive year of regression when it comes to its safety performance.
In 2021, 74 workers in the industry died as a result of mining accidents, while 60 employees were killed in 2020.
According to the council, the industry is putting mechanisms in place to address this worrying trend. It notes that early indications for 2022 are showing positive signs of improvement.
Sadly the country’s biggest gold producer Harmony Gold on Monday reported in a Sens statement that four of its workers died in a maintenance-related accident at its Kusasalethu mine in Gauteng on Saturday (May 7).
The news added a somber note to the start of the Mining Indaba.
“We are deeply saddened by this incident. At Harmony, we view our employees as part of the larger family. Our priority is now to support the families of the deceased, and everyone affected by this tragedy,” CEO of Harmony Gold Peter Steenkamp said.
In its media statement released to coincide with the start of this year’s Mining Indaba, the Minerals Council also touched on further challenges the industry faces, such as SA’s subpar rail and port operations. This issue resulted in an increase in mining industry “opportunity costs” to as much as R50 billion in 2021, according to the council.
“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 benefiting from high commodity prices and strong demand for our minerals,” says Baxter.
The council further noted with concern the rapid increase of input costs in relation to that of commodity prices, which it says has been largely driven by rising electricity and fuel prices.
“Although production has recovered by 11% from the low base in 2020, the 20-year index of mining production shows that sector production has not recovered since the 2000/2006 peak and is struggling to maintain 2015 levels.”