Mining in Africa is not a ‘sunset industry’

by Roger Baxter, May 09 2013, 05:24

THE role the mining sector can play in unlocking the economic potential of Africa will feature prominently at the 23rd World Economic Forum on Africa in Cape Town this week. One thing that will stand out is that mining is not a "sunset industry". The explosion of technology and the rapid growth in new supporting industries has brought new momentum to mining, with increasing demands for minerals such as copper, aluminium, nickel and titanium, — in addition to the traditional requirements for gold, platinum and coal.

Africa’s rate of urbanisation will accelerate this growth trend. The United Nations projects that the number of people living in cities will grow by more than 3-billion in the next 40 years — 800-million of whom will be in Africa. On this most youthful continent, where two-thirds of the population will be younger than 35, the demand for products extracted through mining will continue to grow. Minerals will remain essential in the manufacturing of such products as cars, smartphones, light bulbs and cosmetics.

At the same time new mining areas with immense potential for production are being discovered and opened up, such as in the Gabon-Cameroon-Congo region. New geological mapping techniques will enable the industry to explore and discover mineral deposits which can be developed into productive mines.

The World Economic Forum on Africa thus meets in Cape Town at a time of optimism about the long-term future of the mining industry.

Mining is a long-term, cyclical industry that requires a predictable, stable and competitive legislative and business framework to attract the investment needed to develop a sustainable and successful mining operation. In such an environment the three primary players — business, labour and government — can together find ways to realise the economic potential of South Africa’s immense mineral resources. The government’s commitment to the National Development Plan signals a strong movement towards investment in high-value-added industries, increased competitiveness and growth in the volume of mineral exports.

Already, mining makes up a fifth of the South African economy, contributes R468bn to South Africa’s gross domestic product, half of our export earnings and provides jobs to more than 1.3-million people.

The announcements on major infrastructure development projects, including improved rail and road links, made by President Jacob Zuma in this year’s state of the nation address, hold great promise for the future growth of the industry. It is no coincidence that the bulk of this new infrastructure will be provided in mineral-rich provinces such as Limpopo, North West, Mpumalanga and the Northern Cape and are designed to facilitate the movement of ore and other raw products. Adequate heavy-haul rail will enable miners of iron ore, manganese and coal to double, if not treble, production, resulting in the creation of more jobs and a rapid growth in South Africa’s tradable export sector.

With the main policy debates settled, and a commitment from the government to invest in long-term, sustainable infrastructure, the time has arrived for a more constructive discussion on the mining sector’s contribution to society.

The industry is acutely aware of the broad range of developmental challenges facing South Africa, and the rest of the continent, most notably in the field of poverty alleviation, job creation and skills development. The mining industry has demonstrated its commitment to transformation, community development, responsible environmental practices and safety. Forums such as the Mining Industry Growth, Development and Employment Task Team provide useful opportunities for the industry and its partners in labour and government to discuss the contribution the sector can make towards job creation and sustainable economic growth.

The mining industry is of the opinion that the high unemployment rate in South Africa can only be reduced through balanced growth including a surge in tradable export sectors such as mining.

The theme for the World Economic Forum on Africa’s meeting is "Delivering on Africa’s promise". This can be achieved through increased competitiveness, inclusive growth, significant investments in strategic infrastructure and programmes to unlock the continent’s human potential and talent.

The mining sector in South Africa and on the rest of the continent must be a constructive and indispensable partner to achieve these objectives.

Baxter is senior executive: economics and strategy at the Chamber of Mines.