Sibanye-Stillwater CEO Neal Froneman said South Africa’s mining industry is in a precarious position and facing challenges that could “easily” push it into a loss.
Speaking to CNBC Africa on the sidelines of the 2024 Mining Indaba, Froneman identified the key issues holding South Africa’s economy back.
Froneman listed energy, logistics, crime and corruption and said the reason they have become critical is due to the country’s leadership.
When asked about South Africa’s current political landscape, Froneman said he expects 2024 to be a “very noisy year”.
“It’s going to be a year much like Christmas – as we call it, ‘silly season’ – with certain groupings trying to take advantage, disrupt,” he said.
“We are already in a precarious situation with low commodity prices, so that could very easily push the industry into a loss.”
Froneman’s comments come as the Minerals Council of South Africa released a report on the ‘State of the Mining Nation’.
In this report, Minerals Council chief economist Hugo Pienaar said Eskom & Transnet severely constrained mining in 2023, as shown in the graph below.
Pienaar also revealed that mining output in South Africa is on a steep downward decline, with production 13% below the level seen in the 1980s.
He explained that mining was not only the backbone of South Africa’s economy in the past but still matters today.
The sector employs over 477,000 South Africans and pays the government over R140 billion in tax and royalties annually.
In recent times, mining has been able to smooth over the country’s deteriorating finances as the commodity boom in 2021 and 2022 enabled the government to extend the Covid grant and balance its budget.
However, this boom is long gone, and a near-perfect storm of load-shedding, logistical bottlenecks, declining commodity prices, and rising labour costs have hit the mining industry.
The latest data from the council shows that the mining sector’s contribution to GDP crashed 12% in 2023 due to the electricity and logistics crises that have hit miners hard, Pienaar said.
In particular, platinum group metals (PGMs) miners have been hard hit with steadily declining prices for their commodities.
Sibanye was one of several mining companies that announced job cuts in South Africa due to declining profitability at their local operations.