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SLUMP IN SOUTH AFRICA'S MINING SECTOR: Persistent Job Losses Amid Infrastructure Deterioration

Published October 29, 2023
1 years ago

Job losses in South Africa's mining sector are set to continue unabated as the industry grapples with significant challenges from unreliable electricity supply, water scarcities, and deteriorating logistic infrastructures hindering market access.


This dire forecast was put forward by mining analyst Peter Major in an interview with Business Day TV. Major underscored the gravity of the situation, stressing that unemployment and poverty would intensify if the government failed to tackle these issues with urgency and effectiveness.


The recent release of third-quarter production data from prominent mining firms Anglo American Platinum (Amplats) and Kumba Iron Ore paints a picture of the sector's struggles. Kumba's production plummeted by 12% compared to the previous year, while Amplats witnessed a 9% decline.


Major identified the unfavourable economic environment as the primary factor inflicting harm on these figures, explaining that the mining sector is heavily dependent on commercial growth to stimulate demand and ramp up the commodity prices.


South African mining companies, being in dire straits, have been unable to seize opportunities from the increasing demand and soaring prices owing to their inability to transport commodities to the market. This predicament has been primarily caused by Transnet’s rail and port facilities becoming increasingly congested choke points.


Case in point, despite a surge in iron ore prices over the last two quarters, Kumba's sales estimate for the third quarter slumped by over 10%, courtesy of logistic challenges—the company is currently stuck with a stockpile of 9 million tonnes of iron ore that it cannot move to the coast for exportation.


In the context of Amplats, it suffered a five-day water outage at its Rustenburg operations, leading to a 9% downturn in production and sales during the third quarter.


According to Major, mining companies rely as much on Eskom, Transnet, and local government for their water supply as any other South African citizen. Though they've managed to counteract the adversities to an extent, their capabilities may not hold up for long.


"As the government fails to manage these infrastructural issues, we risk deeper employment problems and rising poverty. Only with conducive conditions can businesses thrive and create wealth, pulling the nation upwards. If the government doesn't step in in time, unemployment will worsen", warned Major.



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