Volatility and disruption have become defining features of South Africa's mining sector, with fragmented supply chains and an ongoing energy crisis dominating the agenda.According to Duncan Wanblad, chief executive of Anglo American, the current environment demands mining houses to show greater resilience and agility than ever before."The last few years have certainly been characterised by volatility and disruption – from macroeconomic risks and geopolitical upheavals to inf lation and higher interest rates, coupled with China’s tentative economic recovery. Add to that the challenges of fragmented supply chains and the dual crises of energy and climate," he said, highlighting that moving forward, disruption must be seen as the new normal.In South Africa, said Wanblad, the three biggest challenges were energy, logistics and crime and corruption. Dealing with these challenges was critical for mining to thrive.He said it was important to remember the contribution of mining to the South African fiscus. “In 2021, the R70 billion the mining industry in South Africa paid to the fiscus in company taxes and royalties was 70% higher than in 2020. In 2022, that figure rose to R88bn, comprising company taxes of R73.6bn, and royalties of R14.2bn.”He said in an effort to improve its own resilience Anglo American had made a number of changes, including to reset its business onto a more sustainable footing. "Like everyone, we have to set up our mining operations for long-term success and to be competitive on the world stage. And that starts with reliably delivering what you plan to deliver – the right volumes at the right cost to generate the right value. That’s the foundation of resilience.”He emphasised that finding the sweet spot in that combination of volumes and value remained the only way to attract the capital needed to sustain the mines that are the lifeblood of many economies, not only in South Africa but across the continent.“It is clear to me that only the companies and countries that pay attention to global shifts, demonstrate agility in the face of uncertainty and reposition themselves for the future, will prosper.”He said with platinum-group metals and diamonds being at the bottom of their cycles, coupled with the logistics issues hampering the group’s mining operations, including those seen at the Kumba iron ore operation, it was not always easy developing resilience.“In 2023, we saw a rapid decline in certain commodity prices as interest rates soared to dampen rampant inf lation and economic growth faltered – PGMs, nickel, lithium, and cobalt to name a few have all decreased sharply,” said Wanblad. “Concurrently, mining companies have been facing their own set of challenges, fuelled by declining ore grades and sharply increased input costs. Margins evaporate quickly in these circumstances, so something has got to give. We are all aware of the pain in South Africa’s PGMs industry right now.”He said what mattered however was the industry and government’s ability to successfully navigate these challenges to ensure that the industry not only survived, but prospered.
