Pressure mounts for major shake-up in mining sector – Times LIVE

Despite being the most resource-rich country in the world, according to a Citigroup estimate of its resources being worth $2.5-trillion, SA's mining has been declining for years and shrank during the commodities boom from 2001 to 2008.

A McKinsey report, part of the mining charter review process, found SA's mining sector, in real 2005 rand terms, shrank to R92-billion in 2009 from R103-billion in 1993. If the domestic mining sector had matched growth in the SA economy between 1993 and 2009 of around 3.3%, its value would have been R173-billion, 87% bigger than it was at the end of 2009.

The nominal value of mineral sales would have totalled R390-billion in 2009, compared to the R232-billion achieved, according to the report.

Mining exports contribute about a third of SA's total exports, 10% of GDP and about 500000 jobs, mainly in poor, rural areas. Despite the decline, the industry remains "absolutely central to our economy", said David Lewis, professor extraordinaire at the Gordon Institute of Business Science (Gibs) and former head of the Competition Tribunal.

"Globally it is looked upon as the health and character of the SA economy. If something goes badly awry in mining, fairly or unfairly, it is read as something of a metaphor for the SA economy. If something goes wrong in the relationship between mining and government, it is read, wrongly or rightly, as a metaphor for business relationships in SA," Lewis told a Gibs panel discussion this week.

Much of the lacklustre performance of mining in the past decade is blamed on the regulatory framework and the Minerals and Petroleum Resources Development Act of 2004. Gaps in legislation and the government's lack of capacity are blamed for the licensing debacles with Kumba Iron Ore and Lonmin, which made international headlines and shook investor confidence.

via www.timeslive.co.za

This is more for my own information. But it does make for interesting reading and is likely to be denied by the ANC and DMR.

AngloGold Ashanti CEO Mark Cutifani said the regulatory environment alone was not to blame for the lack of growth. Other factors included a shortage of skills, the impact of empowerment on capital allocation, above-average international unit cost inflation of inputs such as electricity and labour, infrastructure issues and a decreasing productivity trend – "due in part to health issues, and due in part to some labour and management practices that we have to work on".