Cyril Ramaphosa | Mining is vital to South Africa’s economic recovery – and can help build infrastructure


Let’s seize the opportunities that exist in the mining sector so that it can help guide our path to a more inclusive and equitable economy, writes President Cyril Ramaphosa in its weekly newsletter.

Dear South African compatriot,

Since the start of the coronavirus pandemic early last year, we have been fighting on many fronts. We have worked to save lives, restore human health and protect livelihoods, while reviving an economy deeply damaged by the pandemic.

As we step up these efforts in the face of a third wave of infections, we are greatly encouraged by the latest evidence of economic recovery.

Last week, the South African Revenue Service (SARS) announced that we had another record trade surplus in May, worth R 54.6 billion. The surplus is due to a 1.5% increase in exports between April and May. Our trade surplus is growing year by year.

The trade surplus is mainly driven by exports of minerals and precious metals, as well as exports of vehicles and transport equipment, chemicals and agricultural products. High commodity prices and rising global demand are good for our economy, especially the mining sector.

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Rising global metal prices will play an important role in accelerating our recovery from the pandemic crisis. In addition, they open up a multitude of new opportunities in the mining value chain, increasing the fortunes of the mines themselves and with them the suppliers of capital goods and enrichment options.

The role of mining in the economy

Mining has always had a dual role in our economy and our society.

On the one hand, mining contributes more than half of our goods exports, around 10% of GDP and 5% of employment. It is a pillar of our capital goods industry. It is no coincidence that when world metal prices peak, our economy and job creation also increase.

On the other hand, mining has always been at the heart of South Africa’s deep inequalities. Ownership is concentrated in a few large corporations, while workplaces, pay scales and communities around mines are still largely shaped by the discriminatory relationships established under apartheid.

The challenge is to take advantage of the mining boom while laying the foundations for more diversified, inclusive and environmentally sustainable growth.

We must ensure that mining revenues are used to promote more employment-friendly activities and that they empower miners and mining communities. We need to guide infrastructure investments and a more efficient regulatory framework to both take advantage of new opportunities in the mining sector and support overall growth once the commodity price cycle is over.

The role of the state in mining

In constant dollars, the prices of most of our metal exports – primarily platinum, gold and iron ore – are now as high as they were at the peak of the last commodity boom in 2011. These prices have helped support the economy despite the sharp decline in the hospitality and tourism sectors. As a result, our growth has recovered much better than we thought possible in the dark days of last April, even though job creation is still far behind.

Now is the time to facilitate investment along the mining value chain to promote broader job creation, small business development and growth in dynamic new industries.

Investing in infrastructure is a critical part of the government’s contribution to the growth of mining. We have seen this with the rapid growth of the platinum belt over the past 20 years. Kumba iron ore would not exist without Transnet’s bulk ore lines from the Karoo to the coast. New mining developments in the Waterberg in Limpopo depend on the state for efficient and inexpensive transport and energy.

But the government also faces a host of other meritorious demands for infrastructure support. They range from providing basic services to communities hit by the Covid-19 crisis, to modernizing industrial sites for manufacturing, to repairing the national electricity system.

The challenge in these circumstances is to use investments in mining value chain infrastructure to improve conditions for all of our producers and communities. Our new investments in mining must mobilize resources outside the government and contribute to broader economic development.

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Our recent decision to facilitate private power generation up to 100 MW demonstrates the kind of smart measure we need. It attracts investments from mines and refineries for the production of renewable energy, helps stabilize the electricity supply of producers throughout the economy and gives Eskom space to improve the maintenance of its own factories.

Likewise, mining projects can help pay for bulk water developments, which also serve our communities, for the eThekwini transport corridor across Zimbabwe and beyond, and for better broadband access in rural areas. We need to design these projects so that they support new economic activities in agriculture, manufacturing and services and also empower small businesses. In short, these projects must take advantage of our mineral wealth to support large-scale industrialization.

Mining is key to recovery

In 1965, Ghana’s first independent president, Kwame Nkrumah, urged parliamentarians to use the country’s natural resources as a catalyst for development. He said, “We are blessed with the richness of our vast resources, the power of our talents and the potentials of our people. Let us now seize the opportunities which are presented to us and take up the challenge of our survival.

As South Africa, we also face a challenge for our economic survival. Mining is vital to our economy and will continue to be so for the foreseeable future. Let’s seize the opportunities that exist in this sector so that mining can help guide our path towards a more inclusive and equitable economy.

With my best wishes,


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