The industry's role in South Africa

South Africa is a leading world supplier of a range of minerals and mineral products of consistently high quality. In 2005, about 55 different minerals were produced from 1 113 mines and quarries - of which 45 produced gold, 26 produced platinum-group minerals, 64 produced coal and 202 produced diamonds, all as primary commodities, with an increase of 120 mines from 2004.

The increase in the number of operating mines and quarries recorded by the Department of Minerals and Energy (DME) can be attributed to the improvement in the quality and quantity of data from the mining industry, including diamond diggings and sand quarries and improved data collection methodology. Mineral commodities were exported to 101 countries during 2005.

The structure of the industry

Democratic change in South Africa during the 1990s resulted in the endorsement of the principles of private enterprise within a free-market system, offering equal opportunities for all the people. The state's influence within the mineral industry is confined to orderly regulation and the promotion of equal opportunity for all citizens.

Discriminatory policies excluded a large sector of the population from full participation in the South African minerals industry during the pre-1994 period, before democracy was realised. The new Minerals and Petroleum Resources Development Act, legislates the official policy concerning the exploitation of the country's minerals. The restructuring of the South African economy and changing local and international circumstances were taken into consideration by the DME, which drafted the new Act.

The Act addresses many issues, including the following:

• Transformation of the minerals and mining industry;
• Promotion of equitable access to South Africa's mineral resources;
• Promotion of investment in exploration, mining and mineral beneficiation;
• Socio-economic development of South Africa; and
• Environmental sustainability of the mining industry.

Previously South African mineral rights were owned either by the state or the private sector. This dual ownership system represented an entry barrier to potential new investors. The current Government's objective is for all mineral rights to be vested in the State, with due regard to constitutional ownership rights and security of tenure.

The private sector

Transforming the mining industry

Corporate restructuring of the South African mining industry, which has been in progress for more than a decade, continued in 2005. Mining houses continue to transform into focused mining companies by shedding their non-core industrial holdings. The transformation included the consolidation of ownership through minority buy-outs, the transfer of primary listings (and corporate head offices) offshore, as well as the purchase of South African mining assets by foreign companies.

As the South African mining industry is still controlled predominantly by whites, emphasis is being placed on stimulating black economic empowerment (BEE) in the industry. Several black-owned firms are now beginning to play an important role in the mining industry. The last few years has seen the emergence of several empowerment companies of substantial size in South Africa's mining and resources sector. Mining has thus become a focus of the Reconstruction and Development Programme in terms of entrepreneurial development, black economic empowerment and stimulation of employment and economic growth.

New black economic empowerment (BEE) mining giants such as African Rainbow Minerals and Mvelaphanda Resources are shaping the new South African mining landscape. Prominent deals in 2005 included the splitting of Kumba Resources into two companies by placing its iron ore assets into Kumba Iron Ore and housing the balance of the existing assets into a new organisation supplemented by the coal assets of Eyesizwe Coal, forming Exxaro Resources (coal, heavy minerals, base metals and industrial minerals) worth R16 billion. Other deals include the establishment of Ponahalo Consortium through the sale of 26 percent of De Beers' South African operations at R3,8 billion; and the R3,4 billion transaction between Impala Platinum and the Royal Bafokeng.

The Chamber of Mines of South Africa

The Chamber of Mines of South Africa is a voluntary, private sector employer's organisation founded in 1889 - and today acts as the principal advocate of the major policy positions endorsed by mining employers. The Chamber presents the formalised views of its membership to various organs of South Africa's national and provincial governments, and to other relevant policy-making and opinion-forming entities, both in and outside the country.

Other organisations

The South African Mining Development Association was started in 2000 as a junior initiative by a group of people associated with various junior and BEE mining companies. Many co-operative organisations serve the interests of specific sectors of the industry, including the Aluminium Federation of South Africa, the South African Copper Developmnent Association, the Ferro-Alloy Producers Association, the Engineering Industries Federation of South Africa, the South African Stainless Steel Development Association and the Aggregate and Sand Producers Association of South Africa.

Small-scale mining

Numerous smaller groups and companies also carry out mining and beneficiation activities. Not only do they contribute towards the creation of employment opportunities,which may not be considered economically attractive to the larger groups. The Small Scale Mining Board was launched in 2005 by the DME with a mandate to assist with the resolution of limitations observed and identified within the small-scale mining sector. The DME further insisted on the establishment of the South African Small-Scale Mining Chamber as an umbrella body that represents the interests of small scale miners in various forums, with the primary task to facilitate the process of making all small-scale operations legal and ensure that this sector flourishes.

 Source: SAMI