South Africa’s mining industry has a history spanning over 150 years. Notwithstanding South Africa’s heritage of mining, we remain highly attractive for investment.
Our mineral wealth has attracted large capital investments over the decades. We have the world’s largest reserves of platinum group metals and manganese, and some of the largest reserves of gold, diamonds, chromite ore and vanadium.
It is important for South Africa to be aware of environmental issues that have influenced international energy trends – for example, a greater focus on solar and wind energy – and focus our strategy and investment approach accordingly.
Platinum Group Metals (PGMs), gold and chrome provide great value and huge opportunities. It is important, however, to manage expectations regarding commodity prices, and appreciate the cost pressures involved.
There is huge potential to develop our junior mining sector which is the sector that will move the mining industry forward. Our ‘Captains of Industry’ are committed to the growth of our mining industry. South Africa is part of the global economy. While we are competing with the best in mining, we must take our game to a new level.
Diamond and gold discoveries played an important part in the growth of the early South African economy. The country’s stock exchange in Johannesburg was established in 1887, a decade after the first diamonds were discovered on the banks of the Orange River, and almost simultaneously with the gold rush on the world-famous Witwatersrand.
The gold mining industry continued to grow throughout much of the early 20th century, significantly contributing to the tripling of the economic value of the country. Revenue from gold exports provided sufficient capital to purchase much-needed machinery and petroleum products to support an expanding manufacturing base.
Diamond and gold production are now well down from their peaks, though South Africa is still number 5 in gold but remains a cornucopia of mineral riches.
It is the world's largest producer of chrome, manganese, platinum, vanadium and vermiculite. It is the second largest producer of ilmenite, palladium, rutile and zirconium. It is also the world's third largest coal exporter. South Africa is also a huge producer of iron ore; in 2012, it overtook India to become the world's third-biggest iron ore supplier to China, the world's largest consumers of iron ore.
South Africa is the world's third largest coal exporter. About 40% of our coal is used for power production - 77% of South Africa's energy needs are provided by coal.
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AEverything that isn't grown is mined. Mining is a vital industry for a mineral resource-packed country like South Africa. As Roger Baxter, CEO of the Minerals Council South Africa says: "I have always referred to the mining industry as an industry of long cold winters and short beautiful summers."
"Although gold, diamonds, platinum and coal are the most well-known among the minerals and metals mined, South Africa also hosts chrome, vanadium, titanium and a number of other lesser minerals."
(Minerals Council South Africa)
The discovery of gold in the late 19th century spawned the development of the city of Johannesburg, Egoli, or the City of Gold.
In the 20th century, the large gold mines on the West Wits line were established, and towns like Carletonville and Klerksdorp became important and busy centers. For many years, South Africa was the world’s primary gold producer.
The mining sector’s share of the South African economy is estimated to have been 6.8%, marginally down from the 7% of overall gross domestic product (GDP) recorded in 2016. This despite the fact that growth resumed from the dismal decline (-4.3%) in 2016 to an expansion of about 4.6% in 2017, contributing R312 billion to GDP.
Among the nation's gold mines are two of the deepest mines in the world. The East Rand Mine, in Boksburg, extends to a depth of 3,585 metres (11,762 ft). An extension to the TauTona mine in Carltonville, brings the total depth to over 3,900 metres (12,800 ft) - breaking the current record by 127 feet (39 m).
Coal mining in South Africa can be traced to the start of gold mining in the late 19th century.
Demand began to grow exponentially as the country entered a period of industrialisation during and following World War 2. This included a major programme of building power stations, particularly on the coal fields of Witbank and Delmas, as well as in Secunda.
South African coal has a comparatively medium ash content, which can be reduced by washing before sale. Higher grades of final product are delivered to export markets with the lower grade product burned by Eskom’s specially designed power station boiler hearths.
Excluding Sasol, the coal sector employs in the region of 82,248 people, which is the third largest group in the mining sector after gold and platinum group metals. Their annual earnings are in the region of R22 billion.
At current rates of production, South Africa has reserves sufficient to satisfy its needs for more than a century.
The discovery of the first platinum nuggets in South Africa dates back to 1924.
Geologist Hans Merensky discovered two deposits, each around 100km in length, which became known as the Bushveld Igneous Complex. This igneous body hosts more than half the world’s PGMs, and other associated minerals such as chromium, vanadium and refractory minerals. The Merensky Reef is found between the Critical and the Main Zone, and is rich in platinum group elements (PGEs): platinum, palladium, rhodium, iridium, osmium and ruthenium.
The mines on this geological structure have for many years produced more than 75% of the world’s output.
Since World War 2, platinum mine production has grown continuously in response to new applications being developed for the metals. A significant new use of platinum was in the petroleum industry where platinum catalysts were introduced to increase the octane rating of petroleum and to manufacture important primary feedstocks for the growing plastics industry. This was followed in the 1960s by growing demand for platinum jewellery – given its purity, colour, prestige and value.
Natural diamonds were formed some 3.3 billion years ago in conditions of intense heat and pressure 150km below the earth’s surface.
While diamond mining has been taking in place in South Africa for almost a century and a half, the country’s diamond sector is far from reaching the end of its life. Developments at the country’s three largest mines are designed to expand their outputs and to extend their lives to anywhere between a quarter and a half a century.
The Venetia mine in Limpopo, owned by De Beers is South Africa’s largest diamond producer, recovering some 8Mct a year. The Finsch mine, part of the Petra Diamonds group, is South Africa’s second largest producer and produces an annual 2.1Mct. Near Pretoria and also part of the Petra group, the Cullinan mine is being restructured and expanded to mine at ever-increasing depths with a life expectancy in excess of 50 years.
Diamonds are the ultimate luxury for people around the globe. They are available in quantities that most other gems fail to come anywhere near. The operating costs, labour and skills that go into producing even the smallest polished gem mean that prices at the jeweller’s counter reflect the gem’s luxury status.
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"It is fitting that this occasion should coincide with the 25th anniversary of the achievement of democracy in South Africa, given the significant role the mining industry has played in the construction of present day South Africa", said President Cyril Ramaphosa at the Investing in African Mining Indaba, 5 February 2019.
The President further said that the South African economy has a lot to offer, and opportunities for growth are abundant. "We must harness our areas of comparative advantage and create an environment conducive to investment."
"As government we regard the mining industry as a key player in the future growth and development of our economy, with huge potential for exploration, production and beneficiation," he said. President Ramaphosa assured guests that significant work has been done to remove the uncertainty that hindered the development of the mining industry.
South Africa’s Minister of Mineral Resources, Gwede Mantashe, said in his address that while the past decade has been a challenging one for the mining industry both globally and locally, the last two years have shown signs of recovery in demand resulting in an upswing of some commodity prices.
Mining production in SA rose by 0.5% year-on-year in October 2018, contributing R447bn to the economy largely due to increased production of nickel, PGMs, diamonds, manganese and chromium ores. Last year 70 mining rights were granted by the department and five new mines came into operation, most of them being coal mines, demonstrating that there is still keen interest from investors. "We hope to build the mining sector's contribution to GDP up to 10% in the next five years," Mantashe said.
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