Weak metal prices will hit South African miningNovember 5, 2008 by: admin
JOHANNESBURG (Reuters) – South Africa’s Minerals and Energy Minister, Buyelwa Sonjica said on Tuesday the global financial crisis that had led to a decline in metal prices would negatively impact the country’s mining sector.
“It (Financial crisis) is affecting all economies and South Africa is no exception,” she said.
“I see it impacting on the producers. Of course also on the exports. I would think that it will impact on the negative. I’m very concerned because then it would have other negative consequences on employment.”
Mining companies in South Africa have in recent weeks said they are taking a fresh look at their prospects and projects due to the credit squeeze that has led to fears of a global economic slowdown and resulted in weak metal prices.
Lonmin Plc, the world’s No. 3 platinum producer, has advised trade unions of possible lay offs due to the big drop in demand for the metal from car makers, unions said on Monday.
Platinum has lost more than half its value in the last quarter on slow auto sales data and the outlook for demand from carmakers, who consume more than half of the annual platinum output to make catalysts to clean exhaust fumes.
Some other big players have said they too would review their projects owing to the credit crisis.
South Africa AngloGold Ashanti, the world’s No. 3 gold producer, has said it plans to review capital expenditures of $400 million for next year by stopping some projects.
Sonjica, who spoke to reporters after the South African Chamber of Mines annual general meeting, said the country’s drive to embrace blacks into the mainstream economy after years of exclusion under apartheid had also been adversely affected by the credit crunch, falling metal and stock prices.
Under the government-driven Black Economic Empowerment (BEE), miners are required to sell 15 percent of their assets to black investors by 2009 and 26 percent by 2014.
Black-owned companies seeking to buy the assets have relied on fast-fizzling credit, and some have become takeover targets.
“BEE performance has unfortunately been impacted severely by the financial meltdown,” Sonjica said.
Sonjica added that the mining industry would meet early next year to review the progress of BEE in the sector.
South Africa’s Impala Platinum Ltd (Implats) has make a friendly takeover bid of mostly shartes and cash to buy black-owned Mvelaphanda Resources (Mvela) and Mvela’s unit Northam Platinum, in a bid to boost its output.
The deal highlights a trend where black-owned firms that do not have finances to develop projects are being seen as takeover targets by established producers.
Sipho Nkosi said, the Chamber of Mines President, said South African mining companies lost some 12 billion rand this year because of power shortages.
He said the mining sector wanted the government to introduce protocols to handle the nation’s electricity crisis, among other issues to ensure that power customers are ranked in terms of their contribution to the economy.
The mining sector has long complained that it has had to bear the brunt of the power cuts, compared to other sectors of the economy. Mining firms are receiving some 90 percent of their normal power requirements.
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