SA mining sector at a risk of collapse- industry sources

South Africa’s mining sector which is a key pillar of the economy is in crisis.

According to industry sources, the sector is at a risk of collapse due to political unrest and labour instability which has negatively impacted investments in the country.

This was revealed by Neal Froneman the CEO of Sibanye Gold, who spoke to Reuters during an investment conference on mining in Africa, held in London.

“It’s just very clear, we sit on a knife edge as an industry – it could well collapse and that means it’s unlikely that Africa’s potential will be realised because resources will be sterilised,” he said.

Currently, South Africa’s Chamber of Mines which represents most of the industry says it will take the government to court over the 2016 draft of the mining charter, which it says it was not consulted.

The charter states that companies should keep black ownership at 26% even if they sell their stake and raises procurement from black owned companies.

In addition to labour instability, governance continues to affect investor confidence. Scandals surrounding president Jacob Zuma have caused concern among investors, affecting credit ratings of the country.

“Investors are dependent on safeguarding their investments through proper governance, if you have questions about a country’s governance and poor corporate governance then investors simply won’t invest,” Froneman added.

Mining accounts for about 7% of South Africa’s GDP.