7 November 2007

South Africa: Mining Investment Shows Recovery

Johannesburg — REAL fixed investment in SA's mining sector gained 14,8% last year and 34,1% in the first six months of this year after co-operation between the industry and government to reverse the declining trend, Chamber of Mines outgoing president Lazarus Zim told its annual general meeting yesterday.

Mining sector investment dropped 20% in 2004 and 13,2% in 2005, despite the surge in commodities prices in the same period. The downturn led to the formation late last year of a task team including the government, industry and labour, to identify reasons and suggest solutions.

The three major reasons identified were regulatory constraints, mainly in securing environmental and mining licences; infrastructure constraints including rail, ports and water; and the volatile exchange rate.

Zim said there had been "tremendous improvement" in the processing of licence applications by the minerals and energy department. Infrastructure constraints were being addressed through a forum consisting of mining companies and parastatals. Spoornet had upgraded capacity to 73-million tons, which was not even being filled by the mining industry.

The South African Reserve Bank had also been building up foreign currency reserves, which would act as a buffer to the rand.

Zim said mining was a significant industry, and not a "sunset industry" as was sometimes suggested. Latest statistics showed it contributed 18% directly and indirectly to SA's gross domestic product.

At the meeting, members elected Exxaro Resources CEO Sipho Nkosi as the new president of the chamber, with BHP Billiton Southern African chairman Vincent Maphai and AngloGold Ashanti executive officer Robbie Lazare as vice-presidents.

Minerals and Energy Minister Buyelwa Sonjica singled out several major areas that presented challenges to the sector, including stimulating investment, employment and beneficiation, as well as addressing health and safety and sustainable development. Employment in the mining sector had picked up to more than 493000 this year after reaching a low of 407000 people in 2001.

In the first half of this year 20000 new mining jobs were created, Sonjica said. Most of those were in the platinum industry but the gold sector had added about 8000 jobs this year.

Growth in the platinum industry was also the main contributor to the doubling in the number of women employed in mining in the past six years, but women continued to be employed mainly in clerical work.

There were a number of barriers that the industry needed to remove in promoting women in mining, including low levels of education and technical skills, cultural issues and a lack of mentors,

Mining health and safety was an issue on which everyone in the industry needed to work together, Sonjica said. The number of accidents continued to underscore the need for urgent action and the industry needed to ensure that relevant research and the outcome of investigations were implemented without delay. She said HIV/AIDS was one of the greatest challenges to the industry, as well as the legacy of past neglect of mineworkers' health.

On her recent visit to Japan Sonjica had realised there was nervousness about the South African government's minerals beneficiation policy and she stressed that the government would not act irresponsibly.

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