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The South African Mining Industry ANGLOVAAL MINING LIMITED CEO’s evening : 2 November 2000.

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Presentation on theme: "The South African Mining Industry ANGLOVAAL MINING LIMITED CEO’s evening : 2 November 2000."— Presentation transcript:

1 The South African Mining Industry ANGLOVAAL MINING LIMITED CEO’s evening : 2 November 2000

2 Exceptional geological deposits Political transition after 1990 Modernise the industry Result: leaner, more focused, more competitive and internationally active industry Major transformation challenge remains MINING IN SOUTH AFRICA Continues to be a highly successful cluster in South African economy Most major minerals have experienced long-term growth Mining is a significant contributor to employment creation, rural economies and regional (SADC) development

3 Hidden inside SA’s aggregate mining statistics are large, expanding industries Production: coal, PGMs and chrome sectors have doubled in size since 1980 During the same period, mining other than gold, grew faster than the rest of the economy World-class support industries (electricity, chemical, engineering) MINING IN SOUTH AFRICA Large, expanding industries

4 MINING IN SOUTH AFRICA 010%20%30%40%50%60%70%80% Phosphate rock Zinc Iron ore Nickel Coal Antimony Uranium Fluorspar Zirconium minerals Vermicullte Titanium minerals Alumino-silicates Gold Vanadium PGMs Chrome ore Manganese Reserves Production South African reserves and production in key minerals 1998 (% of world) Source: Chamber of Mines (1) (2) (3) (4) (5) (8) (6) (9)

5 Mining and related beneficiation accounts for over half of SA’s exports Mining remains the most important earner of foreign exchange Growth in manufacturing exports is based on mining activities MINING IN SOUTH AFRICA 60% of South Africa’s exports

6 Beneficiation process % of production beneficiated % of exports beneficiated Antimony concentrate to antimony troxide6580 Chrome ore to chromium alloys5771 Copper concentrate to copper metal9289 Iron ore to iron and steel3015 Manganese ore to manganese metal and4943 alloys Nickel matte to nickel metal and sulphate 100 Phosphate concentrate to phosphoric acid andphosphaticfertilisers 5237 Zinc concentrate to zinc metal100 MINING IN SOUTH AFRICA Extent of beneficiation Diamond sorting/valuing to cutting/polishing10052

7 Composition by sector of South African export earnings MINING IN SOUTH AFRICA

8 MINING IN SOUTH AFRICA Export destinations for SA’s processed minerals Source: Minerals Bureau Europe 38% Pacific Rim Countries 25.8% Middle East 4.8% North and Central America 28% South America 2.5% Africa 1%

9 Percentage contribution to GDP by sector: MINING IN SOUTH AFRICA Mining / manufacturing is inter-related

10 MINING IN SOUTH AFRICA Contribution to mining GDP, 1998 Source: SA Reserve Bank Coal 21% Gold 45% Diamonds 7% PGMs 27% Gross fixed capital formation continues to be significant Large portion of capital investment in SA over past decade has been into the minerals complex (Alusaf, Columbus, RBM, Saldanha Steel, Sasol, etc)

11 For five million South Africans, mining is the principal ally against poverty Latest census - one in seven men with a formal sector job in 1996 employed in mining industry Mining industry is the conduit for money and opportunity to some of the poorest areas in Southern Africa MINING IN SOUTH AFRICA Principal ally against poverty

12 1996 population census - more than one sixth of the aggregate income of wage earners is derived from mining in 56 magisterial districts These 56 districts are SA’s “mining nation” These areas include poor rural districts from which mine workers are recruited. Total population of these areas is 5,7 million: on average, more than a quarter of all income earned by men is earned from mining MINING IN SOUTH AFRICA Principal ally against poverty

13 MINING IN SOUTH AFRICA Kriel Rustenburg Oberholzer Johannesburg

14 Proportion of workers at various formal education levels MINING IN SOUTH AFRICA Source: Chamber of Mines New mine workers Matric Less than primary 30% 20% 10% 0%

15 MINING IN SOUTH AFRICA Employees on Chamber of Mines gold mines Source: Chamber of Mines 95,000 90,000 85,000 80,000 75,000 20,000 15,000 10,000 5, Unskilled wages Skilled wages Rands per annum Unskilled wages Rands per annum

16 Contribution of direct taxes to the government revenue (per cent of total revenue) Sector 1970s Average 1980s Average 1990s Average Coal 0,29 0,52 0,60* Gold & uranium 10,02 12,51 1,13 Diamonds 1,45 0,56 0,09 MINING IN SOUTH AFRICA * 1990’s figure includes coal and other mining

17 Over last 20 years, two major economic shortcomings have forced African economies to depend on multilateral aid agencies: 1. Owing to inability of governments to generate tax revenues, African countries have saved at less than half the rate of other developing countries. cont…. MINING IN SOUTHern AFRICA Key to economic development

18 2. With limited exports, less foreign exchange to purchase machines and computers required for export-led growth. Root cause of this: political instability, weak institutions, poor policies Mining can play a critical role in Africa’s economic renaissance MINING IN SOUTHern AFRICA Key to economic development

19 South Africa Botswana Namibia Tanzania Zambia Zimbabwe Mozambique Key to economic development in southern Africa MINING IN SOUTHern AFRICA

20 Recent mining FDI* in selected SADC countries (US$ millions) MINING IN SOUTHern AFRICA Source: Business Map/SACS - FDI database FDI : Foreign direct investment

21 SA mining companies are leading the resurgence of mining activity in the region Extensive African exploration is underway Johannesburg may reclaim position as global centre of mining technology, specialist services and supplies It is estimated that half of investment made in large-scale projects in southern Africa is returned to SA through purchase of services and supplies MINING IN SOUTHern AFRICA South Africa is well positioned

22 SA provides sophisticated inputs and services to the global mining industry SA firms have become globally prominent in three areas: 1. Technology providers 2. Providers of knowledge- based mining services 3. Specialist mining contractors MINING IN SOUTH AFRICA South African firms are at the centre...

23 MINING IN SOUTH AFRICA The contribution of mining to the economy must be seen as coming not only from mining operations, but also from upstream and downstream activities and the huge multiplier effects the industry has at economic, social and political levels Mining represents the most successful “cluster” in SA’s economy Conclusion / looking forward


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