Jul 18 2012
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Image Credits: SW_Stock/shutterstock.com
The Republic of South Africa is located at the southern tip of the African continent and has an area of 1,214,470 km2. The country has a predominantly semiarid climate in most regions and a subtropical climate along the east coast. As of 2017, the GDP of the country was estimated at $349.4 billion, whereas its total population amounted to 56.72 million that same year.
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The national flag of South Africa.
Image Credits: CIA Factbook
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The discovery of diamond and gold reserves during the 1870s accelerated immigration and the subsequent oppression of the natives in South Africa. Though slavery and apartheid followed the British rule, the country fought back until 1994 when they finally secured freedom. Today, South Africa is an emerging market with a well-developed energy sector and abundant natural resources.
Despite the economic downturn in 2009, the South African stock exchange remains the 18th largest in the world with the country’s mining sector playing a vital role in its economic development. Since the beginning of 2019, South Africa’s stock market has risen 4697 points, which is a 9.16% increase from the previous year. The following sections look at South Africa’s mineral resources, mining industry, and its future.
Overview of Resources
South Africa is rich in natural resources such as gold, chromium, coal, nickel, iron ore, antimony, manganese, phosphates, beryllium, rare earth elements, uranium, vanadium, diamonds, platinum, tin, copper, natural gas and salt.
South Africa remains the world's largest manufacturer of platinum, with a 68.32% contribution to the total world platinum production as of 2017, which is more than two times as much platinum produced by any other country on Earth. The three primary areas of South Africa that are used to mine platinum include the Merensky Reef, the Upper Group 2 (UG2) Reef, and the Platreef.
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Satellite view of South Africa’s Great Karoo semi-desert region. Image Credits: CIA factbook
The world’s largest natural reserves of gold, platinum-group metals, chrome ore, and manganese ore and the world’s second-largest reserves of vanadium, titanium, and zirconium are found in South Africa. With gold, platinum, diamonds, tiger's eye, and semi-precious stones locally available, the jewelry business thrives in the country.
The mining sector of South Africa spans five major mineral categories, which are as follows:
- Precious metals and minerals
- Ferrous minerals
- Non-ferrous metals and minerals
- Industrial minerals
- Energy minerals
Industrial Minerals and Gemstones
As a leading global producer of diamonds, South Africa is home to 42 different diamond mining companies, of which includes the De Beers Consolidated Mines Group and Trans Hex, both of which reported an increase a 23.8% and 59.5% increase in their diamond output as of 2018. At the end of 2017, South Africa reported a total diamond production of 9.7 million carats, which is estimated to be worth USD 3.1 billion.
Pretoria Portland Cement Co. (Pty) Ltd. (PPC) is the country’s leading cement producer and is one of the four cement producers in the country. The total cement production capacity of South Africa is 14.8 Mt/year.
South Africa is also a leading producer of andalusite. Production of kyanite, rare-earth elements, and wollastonite is also showing an upward trend in the country.
Metals
South Africa has large-scale primary processing units for metals such as aluminum, platinum, and gold. Impala Platinum, Anglo Platinum, Harmony, AngloGold Ashanti, and Goldfields are some of the top mining companies in South Africa.
From 2018 to 2019, South Africa’s gold output declined by 31%, thereby representing the 15th consecutive month that this nation’s gold production has declined. Although South Africa was previously a top gold producer in the world, they continue to face several challenges in mining this metal as a result of deeper ore bodies, labor strife, high costs, policy uncertainty, power supply issues, occupational safety, and lower ore grades.
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The reddish-brown Kalahari Desert. Image Credits: CIA factbook
Switzerland-based Xstrata plc and its partner Merafe Resources Ltd. carried out chromite mining operations at the Waterval, Boshoek, Horizon, Kroondal, and Helena Thorncliffe mines, which have a total capacity of 5.57 Mt/year
Fossil Fuels
Coal continues to dominate the South African energy sector, as it contributed to about 59% of the nation’s total primary energy supply in 2018. The six major producing coal in South Africa include Anglo Coal, BHP Billiton Coal South Africa (BECSA), Exxaro Resources, Glencore Xstrata Coal, Sasol Mining and Optimum Coal Holdings (OCH).
Over the past several years, South Africa has emerged as a leader in the synthetic fuels energy sector dedicated to converting coal to liquid fuels. Additional sources of energy for this nation can be derived from biomass, such as wood and dung, natural gas, hydro-power, nuclear power, solar power, and wind.
Investments
he mining industry in South Africa is continuously adapting to the ever-changing local and international market conditions. The sector attracts both local and foreign investments, with key areas of interest being uranium, cement, gold, chromite, coal, fluorspar, iron ore, manganese ore, andalusite, wollastonite, nickel, and platinum group metals.
According to experts, the country’s coal exports can be enhanced if the capacity of the existing rail lines is increased, especially between the Mpumalanga Province and Richards Bay coalfields and at the Richards Bay Coal Terminal.
The Mining and Petroleum Resources Development Act of 2006 assisted the growth of the junior mining sector in South Africa. The Diamond Export Levy Act of 2007 and the Mineral and Petroleum Resources Royalty Administration Act of 2008 were amended by the South African government in the year 2009. The Black Economic Empowerment program initiated by the government prescribed a 15% increase of black ownership of the mining industry in 2009 and a 26% increase of the same by 2014.
The South African government looks to its mining sector to eradicate the wide divide between the country’s rich and the poor. The South African Chamber of Mines recently opposed the ruling party’s windfall tax plan for the country’s mining sector. Currently, extensive talks are ongoing about the nationalization of South African mines, which some experts feel is a high-risk proposition and should be a last resort.
Despite all this, the future of mining in South Africa seems promising as there is a lot of scope for discovering new world-class deposits in areas where intensive explorations have not yet been carried out.
Disclaimer: The Author of this article does not imply any investment recommendation and some content is speculative in nature. The Author is not affiliated in any way with any companies mentioned and all statistical information is publically available.
Sources and Further Reading
This article was updated on the 30th May, 2019.