Chamber of mines AGM paints picture of an industry struggling to dig itself out of a hole.
Chamber of Mines of South Africa (COM) CEO Roger Baxter painted a pretty grim picture of the country’s mining sector at the chamber’s annual general meeting, which was held on Wednesday at the Johannesburg Country Club. The event saw Sibanye CEO Neal Froneman announced as the incoming vice president of the COM, replacing the outgoing Graham Briggs.
Baxter said the mining sector was still reeling from a very tough 18-to-24-month period where, with the exception of gold, commodity prices tumbled due to weakening global demand and slowing growth in China.
“Costs have risen too quickly,” said Baxter, “If you look at the five years until the end of 2014, electricity prices rose by an average of 19% per year, steel prices by 12% per year, labour costs by about 11% per year and structural steel prices by about 12% per year.”
He said that rate of inflation had eroded the viability of the sector, with about 80% of the platinum mining sector, a fair portion of the iron ore and a fair portion of the coal mining sectors, all either in loss-making positions or marginal at current prices.
Quoting data from StatsSA, he said the mining industry had been the only loss-making sector of the entire economy during 2014 and 2015, recording R47 billion aggregate losses on an after-tax and after-dividends basis.
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