Mining holds the potential to be the driving force in restoring South Africa’s economy, but the sector requires decisive action from government – especially now in the midst of a global pandemic.It is a sector that has again proved its resilience in the face of adversity, despite facing severe headwinds in the past year, according to Mxolisi Mgojo, Minerals Council president.“Mining matters, and makes a very significant contribution to South Africa,” he recently said. By the Minerals Council’s initial estimates, the mining gross domestic product will have declined in nominal terms by nearly 4% in 2020, to a value of R361.6 billion. The Covid-19 lockdown resulted in an estimated inf lation-adjusted contraction of between 10 and 13%. Physical production of metals and minerals was between 10 and 12% lower, which has been exacerbated by legacy logistical constraints, but the strong performance of many commodity markets meant that the value of mining turnover rose by 10% and the value of exports by 24%, demonstrating the very real value of a strong mining industry to the country.Mining, however, can only remain strong if government delivers an environment in which it can operate.The industry at large, through Business for South Africa, has also done an enormous amount of work in making a meaningful and proactive contribution to what needs to be done to be competitive and create investment in South Africa.“It has been incredibly disappointing that a lack of decisive action has meant that – six months after the proposals were tabled – we still don’t have a coherent and inclusive plan.”Words and vague intentions simply do not cut it in the world of dollars and yen, according to Mgojo.“Government needs to partner with, and enable the private sector investment to grow the economy. It can do this by allowing private sector investment into rail, ports, electricity, pipelines, for example. The current state-owned enterprise (SOE) model has failed the nation, and so SOEs continue to constrain competitiveness and economic growth.”There is agreement within the mining community that the sector can – and will – leverage its resources and resilience to reposition itself as an engine of economic growth.That being said, the future is less certain, and the ability of the industry to sustain and create jobs is entirely dependent on whether it can deliver sustainability and attract growth capital. To do that, South Africa needs to become a competitive investment destination, in the top quartile of the World Economic Forum competitiveness rankings.“The need for urgent action on economic policy reform and certainty cannot be overstated,” said Mgojo. “We need material, structural and institutional reforms to stabilise the fiscus and public sector debt. We need to restructure, or sell, non-performing SOEs and we must improve policy certainty. It is critical also to reduce ‘red tape’ and make South Africa a much easier place to do business.”Words and vague intentions simply do not cut it in the world of dollars and yen.– Mxolisi Mgojo “
