Modern Mining April 2024

ECONOMIC OUTLOOK

Energy constraints, logistics bottlenecks and crime impede economic growth

As it did for the latter part of 2023, mining has shown slight signs of improvement in the first couple of months of 2024, in part due to the constraints imposed by energy availability becoming a little more relaxed and certain logistics related bottlenecks becom ing less pronounced, which provided a little more leeway for the mining sector to produce and export more goods than a year ago, renowned economist, Dr Azar Jammine, tells Modern Mining .

S peaking to Modern Mining on the side lines of Afrisam’s 2024 Budget Breakdown, Director, and Chief Economist at Econometrix, Dr Jammine, said that while there were some gains, the mining sector continued to face huge headwinds, including a slowdown of the world economy. “One may well see mining, and commodity prices in particular, being relatively depressed, but at the same time, there are global technological develop ments towards cleaner energy that may result in increased demand for some minerals relative to oth ers. However, it is becoming increasingly difficult to take a single view of all mining.” South Africa’s economic performance Although the South African economy is now only marginally bigger than it was prior to Covid-19, the country’s economic performance in relation to the rest of the world is not the worst, Dr Jammine tells attendees at the Afrisam 2024 Budget Breakdown. “If you look at the forecast for the next couple of years, South Africa actually stands marginally above

Chief Economist at Econometrix, Dr Jammine.

the Eurozone and the UK – bearing in mind our pop ulation growth of 1.6% per annum relative to theirs.” Dr Jammine attributed South Africa’s poor eco nomic performance to underlying contributors, such as load shedding, rail freight bottlenecks and the high crime rate. “The incredible spike in the incidence of load shedding experienced in the first half of last year has abated somewhat and, while we continue to have loadshedding, it is not quite as pronounced as it was during much of last year. The good news is that there is improved capacity from our coal fired power sta tions and decreased incidence of sabotage, which has led to a slight improvement in energy availability.” A welcome development has been the enor mous uptake of solar energy by consumers and

Given the challenges at RBCT much of the coal has been diverted to Mozambique, Namibia and neighbouring countries.

businesses with some “6 000 megawatts of electricity now produced through solar panels rather than electricity”. Further to this, rail freight continues to be a stumbling block for the mining sec tor, which is increasingly replacing rail with trucking as a reliable means of transporta tion for commodities. Although the decline in rail freight theoretically translates to greater opportu nities for the truck industry, more potholes emerge as a consequence, which means more work for the construction sector, says Jammine. The decline in rail has led to a slump in the transport of coal to the ports. “This has contributed to huge bottle necks in our transport facilities as well as bottlenecks at South African ports. In fact, there has been a severe reduction in the

12  MODERN MINING  April 2024