South Africa's economic fate hangs on mining industry's preparedness

South Africa's economic fate hangs on mining industry's preparedness

As picks, shovels and machinery dig deep into the earth's surface for those precious mineral resources, minds are cracking in executives' offices as they brace for an economic battering in the aftermath of Covid-19.

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By Farai Diza - Freelance journalist

Artificial intelligence scripts from key scientists have projected South Africa's coronavirus cases to rapidly grow. This will affect an already-battered economy.

The mining industry is one of the country's main gross domestic product (GDP) drivers, having contributed an astounding 60% of exports during the 2019 financial year. But projections have forecast mining will slump, thereby crushing SA's economy.

Human resources capital welfare

Health Minister, Zweli Mkhize, recently told South Africans to brace themselves for an infection spike. This, he said, is inevitable.

"We expect an increase in the number of Covid-19 cases... The workforce shall be affected and no industry will be spared," Mkhize told journalists.

Mines are permitted to operate at 50% capacity under lockdown Alert Level 3. At the beginning of June, the sector had screened 220 500 workers, tested 6 660 with 464 positive cases. A single fatality has been recorded.

The country's biggest employer in the mining industry - Sibanye Still Waters - has already converted old hostels to quarantine facilities. The facilities will house 2 600.

Impala Platinum, meanwhile, has prepared 108 isolation beds, 777 quarantine beds and 319 hospital beds. Anglo Gold has set aside 85 new beds.

"We are in a deep crisis and every day presents us with an opportunity to look into it and to prepare adequately. I am not sure if people really understand what we are facing and the crisis that we are in. The only way that we are going to get out of this crisis is by working together collectively," said Minerals Council SA president Mxolisi Mgojo.

Mine employees are among the most-screened workers in SA. They fall closely behind healthcare workers.

Low confidence and projections

Finance Minister Tito Mboweni, who is due to present a midterm budget later this month, has openly stated that the mining industry will not be spared by Covid-19.

New woes are set to hit the industry as hard as global consumer spending habits reduce drastically. This could influence demand for mineral resources, which will, in turn, affect commodity prices.

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One of the reasons mine workers are among the most-screened is because of their worth. They are the key drivers of the engine that contributes generously towards the country's GDP.

Analysts have speculated that mines are likely to rake more money in the next few months but some will find it difficult to break even. For deep level gold and platinum mines - where miners spend hours to reach the rock face - it will take time for a full production blueprint to be established.

New data released by Stats SA show a massive drop of 47% in April. April was the first full month of lockdown.

Preparing for the unknown

Secretary for trade union Solidarity, Gideon du Plessis, admitted that the economic reality of Covid-19 had already kicked in and it was affecting miners.

"A survey we did found 60% of Solidarity members had to take a salary cut while about 6.6% believe the company they work for is no longer sustainable. These are the sort of challenges already affecting the industry," he said.

Mines earn in dollars and the weakening rand is not an influencing factor. Deep level mines are running at between 75% and 80% production. A drop to 50% will lead to business closure as a result.

Mines are well-known for their high-level health and safety consciousness and they are leaving no stone unmined as they brace for a bitter Covid-19 storm. The laurels of the country's economy lie in their preparedness.

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