Business Monitor International


South Africa Mining Report

Published 12 February 2014

  • 98 pages
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$1,295.00
South Africa Mining Report

The past decade of minimal growth in South Africa's mining sector is set to continue as the country's gold and platinum sectors face diminishing margins and industrial strife. Potential for growth in the iron ore and coal sectors constitute bright spots for the mining industry in the long term. We forecast South Africa's mining sector value to grow by an annual average rate of 1.1 % over our forecast period, from US$32.7bn in 2014 to US$34.2 bn in 2018 .

South Africa's share of global mined output is set to decline further as other mining jurisdictions experience faster rates of growth. We expect investment, particularly in gold mining, to be more attracted to low-cost, high resource opportunities in the rest of the continent such as the Democratic Republic of Congo.

South Africa's mining sector is amenable to investment, with few obstacles confronting foreign companies wishing to enter. The government is generally stable and South Africa's business environment is one of the best on the continent. Nevertheless, recent developments in the country's mining regulatory environment have led to serious uncertainty among investors. The government is amending its laws regulating the mining sector with a view to taking a greater share of mineral resource profits and to force greater local beneficiation. A carbon tax has also been proposed and will be potentially implemented in 2015.

Weak Growth Ahead
South Africa: Select Minerals, Growth Forecast, % chg y-o-y

Industrial unrest will continue to prove a challenge. The precedent set by Lonmin offering a 22% pay rise for workers in the wake of the Marikana strike in 2012, has provided a benchmark for future pay negotiations. Rising cash costs and diminishing margins will mean that mining companies are increasingly unable to meet these demands, resulting in further labour unrest and strikes. This situation is exacerbated by competition between the two major unions, the NUM and AMCU, who will try to outbid one another in...

Table of Contents

BMI Industry View
7
SWOT
9
Industry Forecast
11
Iron Ore: A Bright Spot For South Africa
11
Table: South Africa - Major New Iron Ore Projects & Expansions
13
Risks Lurking On The Horizon
13
Table: South Africa - Iron Ore Production
14
Gold: Output Decline To Continue
14
Potential Upside-
17
Table: South Africa - Gold Production
17
Diamonds: Promising Outlook
17
Downside Risks
18
Table: South Africa - Largest Diamond Projects
19
Table: South Africa - Diamond Production Forecast
19
Platinum: Bearish Outlook Across Sector
19
Table: South Africa - New Platinum Projects
20
Table: South Africa - Platinum Production
22
Palladium: Output To Stagnate
22
Table: South Africa - Largest Palladium/Platinum Development Projects
24
Table: South Africa - Palladium Production
24
Coal: Turnaround On The Horizon
24
Table: South Africa - Major Projects & Expansions
25
Domestic Consumption To Temper Export Boom
26
Infrastructure A Major Downside Risk
27
Carbon Tax Threat
28
Table: South Africa - Coal Production
28
Industry Risk Reward Ratings
29
Risk/Reward Ratings
29
Lower Gold Prices Reduce Rewards
29
Table: Africa - Mining Risk/Reward Ratings
30
Reduced Rewards For Copper Mining
30
Mixed Rankings For West Africa
31
Substantial Rewards In Southern Africa
31
Lack Of Uniformity In Regulatory Development
32
Political & Infrastructure Risks Lurk
33
Country Highlights
34
South Africa: Deteriorating Environment For Mining Companies
34
Mozambique: Mining Sector Set To Boom
35
Botswana: All Round Outperformer
35
Market Overview
36
Global Share To Decline
38
Regulatory Hurdles
38
Table: South Africa - Main Expansion Plans
38
Energy Costs & Labour Unrest To Hinder Miners
38
Weaker Rand To Provide Some Respite
39
Table: South Africa - Mining Industry Value & Production
39
Regulatory Development
40
Table: South Africa Political Overview
42
Table: Africa - Regulatory Outlook & Ratings By Country
43
Commodities Forecast
45
Commodity Strategy
45
Aluminium: Continued Short-Term Weakness
48
Copper: Recent Strength Doesn't Change Our View
48
Nickel: Recent Strength To Subside
50
Zinc: Price Momentum To Continue
52
Table: Select Commodities - Performance & BMI Forecasts
54
Competitive Landscape
55
Table: South Africa - Largest Mining Companies' Financial Data
56
Company Profile
58
AngloGold Ashanti
58
Overview
59
Strategy
60
Table: AngloGold Ashanti - Key Financial Data
61
Anglo American
63
Company Strategy
66
Latest Results
67
Table: Anglo American - Financial Data
68
Impala Platinum
69
Table: Impala Platinum - Key Financial Data
72
Regional Overview
74
Mining - Africa Overview
74
Key Opportunities
74
1
74
2
75
3
76
Key Challenges
77
1
77
2
78
3
79
Table: Africa - Key Mining Regulatory Developments
80
Global Industry Overview
81
Methodology
93
Industry Forecast Methodology
93
Sources
94
Risk/Reward Rating Methodology
95
Table: Mining Risk/Reward Ratings Indicators
97
Table: Weighting Of Indicators
98

The South Africa Mining Report has been researched at source and features Business Monitor International (BMI)'s mining and commodity forecasts for metals, minerals and gems, covering all major indicators including reserves, production, exports and values. The report also analyses trends and prospects, national and multinational companies and changes in the regulatory environment.

BMI's South Africa Mining Report provides industry strategists, service companies, company analysts and consultants, government departments, trade associations and regulatory bodies with BMI's independent forecasts and competitive intelligence on the mining industry in South Africa.

Key Benefits

  • Use BMI's independent industry forecasts on South Africa to test other views - a key input for successful budgeting and planning in this mining market.
  • Target business opportunities and risks in South Africa's mining sector through our reviews of latest mining industry trends, regulatory changes and major deals, projects and investments in South Africa.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity), Key Projects Tables and Competitive Landscape Tables.

Coverage

Executive Summary

Summary of BMI's key forecasts and industry analysis, covering mining reserves, supply, demand and prices, plus analysis of landmark company developments and key changes in the regulatory environment.

Business Environment Ratings

BMI's Mining Business Environment Ratings provide a country-comparative Risk-Reward Ratings index aimed at investors (mining companies and support service providers) in the regional mining market. The ratings methodology makes sophisticated use of over 40 industry, economic and demographic data points and is part of BMI's integrated Country Risk-Industry Ratings products.

Key Projects

Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by metal/ore.

BMI Industry Forecasts

Historic data series (2009-2012) and forecasts to end-2017 for all key industry and economic indicators (see list below), supported by explicit assumptions, plus analysis of key downside risks to the main forecast. Indicators include:

  • Mining Industry: Industry size (US$mn), real growth (%), % of GDP, employment ('000), workforce as % of total workforce, average wage (US$).
  • Output:Production volumes ('000 tonnes, carats etc.) for all major metals, minerals, ores and gems mined in each state, including bauxite, copper, gold, coal, lead, silver, tin, titanium, uranium, zinc etc.
  • Exports: Value of exports (US$mn) for all major metals, minerals, ores and gems mined in each state .
  • Commodity Markets: Global demand, supply, stocks and benchmark prices (US$) for aluminium, copper, lead, nickel, tin, zinc, gold and steel.

BMI Macroeconomic Forecasts

BMI forecasts to end-2017 for all headline macroeconomic indicators, including real GDP growth (%), inflation (%), fiscal balance (% of GDP), trade balance (US$bn), current account (US$bn) and external debt (US$bn).

Competitive Landscape Tables & Analysis

Comparative company analyses and tables detailing by US$ sales, % share of total sales, number of employees, year established, market cap/NAV, ownership structure, production and % market share.

Company Profiles

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI's industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

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Testimonials

'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc