South Africa's Mining Resource Depletion: A Matter of Concern

A call to attention has been issued from PricewaterhouseCoopersZ (PwC) in their South Africa Mine 2023 report, stating that South Africa has less than 50 years left of mining resources such as gold, platinum, iron ore, and coal, on average. This projection follows an intensive analysis of 29 domestic mining companies.

The study revealed a slump in combined net income, from a record R206 billion to R108 billion within a financial year. A host of factors, including lower commodity prices, rising costs, power cuts, and rail network issues, were identified as contributing to this decline. Despite the drop in earnings, the industry's profitability still does better in comparison to the R32 billion recorded in 2019, and significantly better than the loss in 2018.

The mining sector’s struggles pose substantial impacts on the government, which has previously relied on substantial taxes and royalties from this sector. A concerning 34% fall in the industry’s reported tax expense was noted. Mined materials accounted for approximately 58% of total exports in the first half of 2023, amounting to R575 billion.

The report highlighted the often-overlooked challenge – shrinking reserves of South Africa’s mining sector. The gold industry has just 27 years left on average. Gauteng province, traditionally the heart of mining, is now centering 84% of the left 68 Moz gold reserves, with ten operational gold mines and one under development.

Similarly, the mining of PGMs (Platinum group metals) and iron ore also echo the alarming countdown. On average, there are 38 years of PGM mining left from operating mines at current depletion rates. South Africa has approximately 5,106Mt of coal reserves from operational mines, which at current depletion rates, will last 41 years.

Geographically, Mpumalanga is home to the country's significant coal reserves. Limpopo, despite having substantial reserves, mostly has them concentrated in a single mine.

As of 30 June 2023, South Africa has approximately 696.48 Mt of iron ore reserves left. These reserves are concentrated in two mines that will operate for approximately another 14 years. The other iron ore operations will deplete sooner, with an estimated nine years of mining left.

What lies ahead for South Africa is an increasing need to address this challenge of resource depletion. Contingent on this is securing the future of mining workers, exploring new investment avenues for resource replenishment, and strategizing how to extend the lifespan of existing mines.