Mineral production exceeded R1-trillion for the first time in history in 2021, driven in part by high commodity prices that led to higher local taxes, wages and employment, according to new figures by Minerals Council SA.
The value of production was R1.188bn, more than 30% higher than in 2020, and added 5,369 jobs, the council said in its Facts and Figures 2021 booklet, which was released on Monday. The annual publication provides data and insights into the mining industry.
Minerals Council SA CEO Roger Baxter believes the importance of mining to SA’s economy, the broader economy and the fiscus “cannot be understated”, as its contribution to the economy improved to 8.7%.
“The industry increased employment during 2021, a rare occurrence for a major economic sector in the prevailing climate, more than offsetting the jobs lost in 2020, mainly because of Covid-19, and adding additional jobs to the economy,” he said.
Mining slumped over the past two years as the Covid-19 pandemic disrupted mining activity, but its recent performance injected more money into the fiscus. The cash injection helped the government support people during those tough times as a basic income grant.
The council is concerned about rail and port constraints, which it estimates led to a loss of R35bn in opportunity costs in 2021 based on railed tonnages compared to Transnet’s targeted tonnages.
It added that transport and logistics challenges had caused a shift in the pattern of cargo flows as more cargo, specifically chrome ore, was being diverted from Richards Bay to Maputo in Mozambique.
“Regarding chrome ore, not only is the choice of harbour outlet changing, but rail is being substituted by road transport,” it said.
Another concern for the council is that mineral production did not increase significantly while costs continued to rise faster than inflation.
The last few years have been an exception, but price increases have generally been higher than commodity price rises, largely because of electricity and fuel price hikes.
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