Mining
From The Report: South Africa 2016
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With an estimated $2.5trn worth of proven mineral reserves, the mining sector accounts for around 8% of South Africa’s GDP and 14% of total employment, making it the second-largest employer in the country. However, the industry’s output and performance have been under pressure in recent years, as bottlenecks in labour relations, uncertainty in policy direction and power shortages have weighed on sector growth. Mining is also subject to global headwinds, as slower economic growth in commodity-consuming nations has driven down commodity prices and weakened export revenue. Financial turbulence and volatility will likely see continued fluctuations in sector share prices and could limit capital investment in the near to medium term. However, as South Africa continues to offer some the best mineral reserves in the world, the efficiencies gained now are expected to translate into greater profitability as global commodity prices recover.

This chapter contains an interview with Norman Mbazima, CEO, Kumba Iron Ore.

Articles from this Chapter

Overview

Forging ahead: Mine operators are seeking to make their operations more efficient in an effort to counteract depressed commodity prices
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The country boasts an estimated $2.5trn worth of proven mineral reserves, while the mineral resources sector contributes 8% to South Africa’s GDP directly, 17% indirectly and is the country’s second-largest employer with an estimated 14% of total employment. The sector’s output and performance has, however, been under pressure in recent years. Bottlenecks in labour relations, uncertainty in policy direction and power shortages continue to play a major role in stifling the industry’s recovery. The…

Interview

Under pressure: OBG talks to Norman Mbazima, CEO, Kumba Iron Ore
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Interview:Norman Mbazima What factors are driving the iron ore industry? NORMAN MBAZIMA: The iron ore industry is experiencing its toughest period in some time. Prior to 2014, when prices started plummeting, it was performing quite well. Now, everyone in the industry is scrambling to reduce their cost per tonne and stay afloat. The seaborne iron ore market constitutes about 1.3bn tonnes, of which 1.1bn is produced by only four major companies, meaning the industry is quite consolidated.…

Analysis

Power issues: The industry is exploring alternative energy sources due to regular load shedding
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Insufficient generation capacity in South Africa led to 99 days of load shedding between January and August 2015, with the impact on the country’s energy-intensive mining industry of particular concern. Rising Costs Energy costs for South Africa’s mining industry have increased by over 250% since 2010, according to Peter Leon, head of Africa mining and energy at law firm Webber Wentzel. With the mining sector agreeing to cut electricity consumption by 10% in order to reduce pressure on the…

Analysis

Adding value locally: The government aims to retain a greater share of mineral value in-country through the promotion of beneficiation
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The development of key mining value chains, known as beneficiation, is a major objective for the government. While mining operators support the concept in theory, the practical application has proven more difficult and made the related policies in the pending Mineral and Petroleum Resources Development Act (MPRDA) amendment and the Department of Trade and Industry’s Mineral Beneficiation Action Plan (MBAP) a point of contention. New Terms In January 2015, President Jacob Zuma rejected the MPRDA…