South Africa: The Sun Is Rising On SA Mining Shares While Setting On the Industry

analysis

Judging from the performance of JSE-listed mining shares, Mines and Energy Minister Gwede Mantashe may feel vindicated about his assertions that it is a 'sunrise industry' in South Africa. Don't be fooled: Investors are looking to reap dividends from existing projects before the sun sets.

The prices of JSE-listed mining shares have surged in 2019, leaving most other sectors in the dust. In the year to date, the bourse's mining index has risen by about 25%, compared to about 10% for the all-share index. The gold index has added a hefty 50%. Shares in Impala Platinum, which sank for years, have more than doubled their value in the year to date after nose-diving for years.

This share price performance reflects a dramatic return to profitability in a sector that has been battered for years by depressed prices, soaring costs, labour unrest, and policy U-turns that have left investors dazed and confused. One example: Anglo American Platinum (Amplats) in 2018 paid a dividend for the first time in seven years as full-year earnings more than doubled. They doubled again in the 2019 financial year and it expects a more than doubling in half-year earnings when it unveils interim results on Monday...

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