PwC’s 2023 South African Mining Report explores how mining firms navigate challenges and secure their futures.
Despite facing profitability setbacks, South African mining companies are doubling down on investments to ensure future operational success. PwC South Africa’s recent report, “SA Mine: Adapt to Thrive,” delves into the factors affecting the industry’s performance and how companies are strategizing for sustainability.
South African mining industry’s economic significance
The South African mining sector has long been a cornerstone of the nation’s economy. In the first half of 2023, export data from the South African Revenue Service revealed that mined material exports were valued at R575 billion, contributing approximately 58% to the country’s total exports. This influx from mining plays a pivotal role in bolstering South Africa’s foreign currency reserves.
“The socio-economic environment in which mining companies operate in South Africa is often characterised by high levels of unemployment, low skills and poverty. The consequences of any challenges to mining could result in a dire situation for the nation’s economy and security including the social well-being of society,” says Andries Rossouw, PwC’s Africa Energy, Utilities and Resources Leader.
Moreover, the mining sector is a major employer, offering formal employment to nearly 478,000 individuals, as per Statistics South Africa data. It also contributes significantly to the nation’s treasury through corporate taxes, mineral royalties, and individual employee taxes.
Challenges loom large
In recent times, mining companies have grappled with various challenges, including electricity and logistical constraints, rising operational costs, volatile commodity prices, and a shortage of essential skills. Additionally, illegal mining activities have jeopardized the safety and viability of mining operations, further complicating the landscape.
Vuyiswa Khutlang, Partner at PwC South Africa Energy, Utilities, and Resources, raises the critical question of how long South Africa can rely on key commodities such as gold, coal, iron ore, and platinum group metals. A lack of exploration and delays in investment decisions leading to new production could potentially threaten the industry’s long-term sustainability.
Securing minerals for a sustainable future
With global decarbonization efforts gaining momentum, the focus on securing critical minerals has intensified. In response, mining companies are actively investing in the future. They are channeling their resources into new capital investments, despite experiencing a drop in platinum group metals and coal prices from record highs. The industry’s tax contributions continue to play a pivotal role in maintaining a healthy national trading account.
These strategic investments by mining companies are aimed at benefiting a broader spectrum of stakeholders and achieving sustained outcomes for the industry’s collective prosperity.
In an ever-evolving landscape, South African mining companies are resolute in their commitment to overcome challenges and forge a path toward a sustainable future. By navigating the complexities of the industry and investing wisely, they aim to secure their position as vital contributors to the nation’s economy, the report concludes.
For more commodities news, visit our dedicated archives.