Mining industry asks MPs to help the industry after losses - Times LIVE

TMG Digital | 2016-12-07 17:18:49.0

Image by: Gallo Images/ IStock

The Chamber of Mines on Wednesday appealed to MPs for regulatory and legislative environment that is stable‚ predictable and competitive‚ as it tries to survive in a tough operating environment hampered by high costs and depressed commodity prices.

The chamber presented a briefing to the Portfolio Committee on Mineral Resources on the mining industry’s investment case‚ "in light of the challenges faced by the industry and its contribution to the South African economy".

"While the industry was the only loss-making sector in the economy for the past two years‚ making an aggregate net loss of R37 billion in 2015‚ South Africa continues to host one of the world’s greatest mineral resource endowments. Certainly‚ the South African mining industry has the potential to grow and flourish‚ but as is the case in all sectors of any economy‚ growth requires‚ amongst other things‚ investment‚" said Tebello Chabana‚ senior executive of public affairs and transformation.

"In order to encourage investment into mining‚ policies need to recognise the characteristics of mining and help reduce the risks associated with long-term investment projects‚" Chabana said.

Listing the challenges it faced‚ the chamber told MPs that apart from depressed commodity prices‚ the industry was faced with unsustainable cost increases; infrastructure challenges; "unreasonable" price hikes; workplace challenges‚ including increasing depth and decreasing grades; increasing expectations and demands from stakeholders; and domestic cost pressures that have risen too quickly for mining inputs.

Electricity prices have trebled in seven years‚ the chamber noted. Wages rose by 10% per annum over the past five years‚ stores and materials are up 10% pa; and steel has risen by 12% pa over the past five years.

Productivity‚ however‚ has fallen for a decade‚ largely because of declining grades‚ aging mines and production disruptions.

In addition to a stable legislative environment‚ the chamber proposed:

• More effective problem solving partnership between government‚ business and organised labour
• Stable and constructive labour relations environment and "more impactful" social development
• Access to available‚ efficient and cost effective infrastructure (electricity‚ rail)
• Solutions to improve productivity (modernisation) and reduce cost pressures.

Its report to MPs states: "The mining industry is facing significant challenges and is working to alleviate them (but) partnership between key stakeholders is vital. Policy certainty is critical – it is an area that requires constant work and vigilance."