According Minerals Council South Africa (MCSA) CEO Roger Baxter, South Africa’s economy was in a crisis even before the outbreak of the COVID-19 pandemic, with the country performing below its potential.
“Over the past decade the South African economy decoupled from other emerging economies in terms of having a much slower economic growth rate. We have experienced declining international competitiveness, a collapse in business and investor confidence, falling investment, low levels of economic growth, rising unemployment and accelerating poverty and social upheaval,” Baxter.
He was commenting in a statement in which the Minerals Council welcomed President Cyril Ramaphosa’s recent address announcing the further lifting of restrictions with the shift in the country’s COVID-19 status to level 1 from Sunday.
The Council also strongly agreed with views from the president as well as health experts cautioning that, while restrictions are being relaxed, South African businesses, other institutions and citizens must remain vigilant and continue to exercise safe behaviour at home, at work and in their communities.
The statement also highlighted that the mining industry supported the President’s call to “move to rebuild our economy, restore growth and create jobs” and was ready to play its part.
“COVID-19 has made a bad situation worse. The economy has run into several structural constraints (electricity, rail and ports) and institutional constraints (red-tape, declining capacity in the state to enforce law and order, etc.), which have basically resulted in the collapse in the country’s productivity growth and potential growth rate. These structural and institutional constraints need to be urgently addressed,” Baxter added.
The Minerals Council identified the issues the industry needs addressed by government and itself, and through a social compact, including energy security and cost, logistical port and rail bottlenecks, regulatory uncertainty, modernisation, social tensions with communities and organised labour, and crime, including illegal mining.
“We must address the key issues which undermine our relative competitiveness and impede our growth potential as a country. Like the rest of the economy, the mining industry has significant potential, and if the issues holding it back were to be addressed, this potential could be unleashed, enabling the industry and the country to embark on a new path of inclusive growth and investment, and ultimately, a better future for all.”
The Council further acknowledged the constructive engagement with the Department of Mineral Resources and Energy (DMRE) during the COVID-19 pandemic in terms of working together to save lives and save livelihoods. The industry remains committed to fighting the pandemic and ensuring all safety and health protocols are implemented to contain COVID-19. At the same time addressing the structural and institutional constraints will enable the mining sector to help lead the economic recovery.
Baxter was optimistic about the potential of the mining industry once the identified issues were dealt with. “If all these issues were to be addressed, we estimate that mineral sales could increase by R61 billion and tax revenues by R5 billion; 70 000 jobs could be saved; 26 000 additional direct mining jobs and 47 000 additional indirect jobs could be created in the next four years,” he concluded.