Professional services firm KPMG’s head of mining in South Africa Jacques Erasmus says South Africa’s once mighty and economy dominating mining industry is, at present, in dire straits and is fraught with crisis and increased investor scrutiny.
It is an industry beset by a myriad of challenges that include, and are not limited to: an uncertain regulatory framework, weaker commodity prices, increased working costs, constrained infrastructure, high labour costs coupled with poor levels of productivity and strained labour-management relations.
“It’s no wonder then that the industry has under performed every other sector for a fourth consecutive year and investment into the local mining industry projects remains lower than average. And, unfortunately, such challenges are confronting the industry at a time when investors are focusing increasing attention on the prospects of the African continent,” says Erasmus.
Despite the fact that South Africa is not in the best place from an economic perspective, and is fraught with political issues and industrial challenges, there is still room for optimism about the future and opportunities in the country’s mining sector, he proffers. “As a country, we shouldn’t be distracted from the fact that the long-term economic fundamentals of the industry are still strong,” says Erasmus, adding that mining has been the key engine propelling the development of civilisation for thousands of years and mining is still most important in this technically advanced global community.
However, he says there needs to be a strong sense of consciousness that the industry – particularly in South Africa – is unlikely to become any more stable over the next few years. The industry certainly won’t become any more certain or stable unless there is continued open and honest dialogue between stakeholders – particularly the companies, labour and government – regarding the sustainability of mining in South Africa.
Dialogue that leads to commitments and actions, which provides tangible and credible long-term solution to benefit all is necessary and was the outcome of the Mining Executive Forum that KPMG recently hosted in Johannesburg.
The forum sought to stimulate fresh new perspectives on why the mining sector is doing so poorly, how it can address challenges sustainably and how it should move forward to a positive future. Most importantly, the forum provided a platform for frank discussions on constructive and engaging ways to help the industry build long-term solutions to its many challenges.
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