Mining Indaba and South African commodities


nvesting in African Mining Indaba is an annual conference dedicated to the successful capitalisation and development of mining interests in Africa. Taking place in Cape Town, South Africa, it brings together investors, mining companies, governments and other stakeholders from around the world to learn and network, all towards the single goal of advancing mining on the continent. Chief executive Mark Cutifani stated on 6 February that the industry faces three challenging areas:

1) The industry must do more to innovate for longer term sustainability. This is also in the area of environment and safety in order to deliver longer term sustainable returns to shareholders.

2) Partnerships and trust between partners ensuring the right partners are being selected that are responsible.

3) Build a resilient mining sector that is that can withstand the pressures of socio-political and economic changes.

South Africa is one of the most mineral- and resource-rich countries in the world, and mining commodities form a big part of the country’s exports. Like many other countries across the continent as well as the world, the depreciation in commodity prices in the past few years has been a major negative factor affecting the economy. Around 60% of the country’s exports are commodities meaning that the economy is heavily reliant on ensuring prices remain steady.

Gold is crucial to South Africa’s export base. The country produces around 5% of global production which was much higher in the past. In 2017, gold prices rose at around 6% percent. One of the factors pushing gold lower in 2014 and 2015 was a sudden sharp appreciation in the value of the U.S. dollar. However currently gold faces a slight upsurge based on a weak dollar. Central banks around the world hold gold as part of their foreign currency reserves

Diamonds are a significant part of South Africa’s mining industry and was once a leading producer although this title is now held by Russia. Diamond prices depend on the number of carats however since Dec 2007 prices have steadily increased (and fallen) in line with general macroeconomic activity.

South Africa is a major platinum group metals player, with about 73 percent of the world’s platinum mine production supply, which is an incredible number coming from a single country. Companies leading the way in its production include Anglo Platinum — 2.4m ozs and Impala Platinum — 1.6m ozs (annual overall production at around 8m oz). The biggest uses for platinum are in jewellry (white gold) and cars (catalytic converters). Although there has been a decline in platinum prices due to a drop in demand for catalytic converters.

South Africa is one of the bigger coal exporting players producing around 3–4% of global output. Although exports have increased significantly in the last few years this is offset by a slum in price whereby the price of coal floats at US40 / MT, lowest in five years. Only between 2001 and 2003 was the price even lower.