'$2.5 trillion worth of minerals under SA'
Finance Minister Pravin Gordhan says the mining sector needs stability to remain sustainable.
JOHANNESBURG - Finance Minister Pravin Gordhan says while there's still an estimated $2.5 trillion worth of minerals underneath South African soil, it cannot be mined out without attracting investors to the country.
Gordhan addressed delegates at the second annual Mining Lekgotla at the Sandton Convention Centre on Tuesday.
The industry suffered huge losses last year due to a wave of illegal and sometimes violent strikes, and now a strike in the gold sector seems increasingly possible after wage negotiations deadlocked between unions and the Chamber of Mines.
Gordhan said South Africa still remains the best destination for mining, but the troubled labour environment and high production costs are slowing down progression.
He said despite South Africa's abundant supply of minerals, investors have become somewhat reluctant to start-up new projects.
"The mere existence of mineral deposits no longer guarantees investment in the mining sector or associated sectors."
He said stability is urgently needed to retain long-standing business ties.
Meanwhile, the Chamber of Mines says a change is needed in the relationship between mine bosses and labour representatives to bring about stability and secure investment.
Chamber of Mines President and Anglogold CEO Mark Cutifani said a mutually beneficial relationship must be built.
"We as the industry have to take the time to understand our workforce better than we have in the past. We have to engage in real conversations that go beyond the structures that we've had. We need to create a new industry, a new circumstance before we can create a new future."
President of the National Union of Mineworkers (NUM) Senzeni Zokwana said the South African mining industry is in a dangerous place after being hijacked by lawlessness.
Zokwana echoed Gordhan's concerns and issued a stern warning to delegates that investors would withdraw from the country if stability isn't returned.
"The scenario we are in is different now because there's lawlessness. There's a spate of killings and companies are hauled into ransom."
He says mining houses are currently feeling the pinch of labour costs, but there is a bigger threat because of the instability.