Modern Mining April 2023

COLUMNIST

South Africa’s mining underperformance is bad for everyone By Ross Harvey, director of research and programmes at Good Governance Africa (GGA)

J ust-released data from Statistics South Africa reveals a mining production contraction of -1.9% year-on-year to January 2023. It is the twelfth consecutive month in which the year-on-year contraction has been negative. Platinum group met als (PGMs) contributed most of the decline, being 15.2% down itself year-on-year and thus contributing -3.5 percentage points to the overall figure. Diamond production was also down, accounting for about -0.9 of a percentage point to the aggregate. At a benchmark of 100 for mining production in 2019, the only minerals and metals to have increased in production volume since then are chrome ore, manganese ore, and diamonds. Gold, iron ore, cop per, PGMs, nickel, coal and others have all fallen. Despite falling production, year-on-year overall sales in the industry have increased by 6.8% to January 2023, though the trend cycle is slightly downward off a peak reached between May and July 2022. These figures are discouraging, not least because they display early warning signs of not being able to capitalise, for the third time in recent history, on a structural global commodity boom. The demand for critical raw materials to power a green energy transition is not fictitious daydreaming on the part of environmentalists. Increasingly, global capital will flow towards firms that demonstrate their

Ross Harvey, director of research and programmes at GGA.

Transforming gold into jewellery is an example of downstream beneficiation. sustainability credentials and avoid greenwashing. This is because the drive for net zero emissions is not only about the environment: it’s also about sov ereign energy security in an increasingly uncertain world. The global multilateral order that emerged after the fall of the Berlin Wall in 1989 is fracturing, as demonstrated in a recent note by the Economist Intelligence Unit. “Over the past year the number of countries actively condemning Russia [for hav ing invaded Ukraine] has fallen from 131 to 122, as some emerging economies have shifted to a neu

South Africa has many raw materials to feed the energy transition.

tral position.” Those signalling neutrality, now 35 countries, represent more than 30% of the world’s population, of which China is obviously the larg est. The changes also highlight “Russia’s growing influence in Africa.” Russia’s invasion of Ukraine exacerbated pre-Covid trends of global divergence. It also changed the energy map for ever. While some western countries resorted back to heavy fossil fuel usage in the short run (leading certain African countries to accuse them of hypocrisy), the long-term trends towards net-zero in western countries is unlikely to be hampered. Of course, global agreement at the UN COP28 later this year is not looking promising, with emerg ing economies becoming more

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