‘SA needs to focus on adding value to commodities’
Minister Rob Davies says the South African economy is in choppy waters due to China’s slowing growth.
JOHANNESBURG - Trade and Industry Minister Rob Davies says South Africa can no longer afford to see itself just as a producer and exporter of minerals and needs to focus on adding value to commodities.
Davies says the South African economy is in choppy waters due to China's slowing growth and the dramatic slump in the price of gold, platinum, coal and iron ore.
"We've seen dramatic falls in prices of iron ore, dramatic drops in platinum such that 40 percent of platinum mines in South Africa are not profitable at the moment; 30 percent of gold mines and 50 percent of coal mines are either marginal or not profitable. That's the reality that has struck us."
He says South Africa is not alone and that mining economies around the world, including Australia and Canada, are experiencing similar problems, while Brazil is now in recession.
"We have to mitigate the effects of this. We have to address much more urgently than we have done before. Things that are domestic impediments to us achieving economic growth, like the energy challenge."
Earlier today, President Jacob Zuma said consistently low commodity prices and the risk of job losses have forced government to call an urgent meeting with labour and business leaders in the mining sector.
The troubled industry is struggling with sinking commodity prices, rising costs and labour unrest, forcing a number of companies into mine closures and layoffs.
Zuma was addressed the mining sector national consultative forum in Pretoria.
The meeting comes after a 10-point plan was signed by the mines ministry, labour and industry to stem a wave of job cuts triggered by falling prices and rising costs.
The president said the meeting was convened to re-establish confidence in the mining sector which remains a pillar of the economy.
He said the difficulties South Africa is experiencing are not unique as the world economy struggles, which is why the mining Phakisa will be convened next month, which he hopes will be a catalyst for development.
The president said government has to take the lead to ensure the sector remains viable and continues to contribute to the economy.
In a message to the unions, Zuma urged them to respect the rule of law and denounce violence and intimidation among their members
LISTEN: The 10-point mining saviour plan