South Africa has less than 50 years of mining left

PwC’s South Africa Mine 2023 report warned that South Africa has, on average, less than 50 years of mining of gold, platinum, iron ore, and coal left. 

The report, which analysed 29 domestic mining companies, showed that combined net income slumped to R108 billion in their latest financial year from a record R206 billion last year.

PwC said this was because of lower commodity prices, crippling power cuts, rail network constraints and rising costs. 

Despite the decline in earnings, the industry’s profitability is still more favourable than the R32 billion recorded in 2019 or the loss in 2018.

The mining sector’s woes will affect the government, which has benefited from windfall taxes and royalties in the past two years. The sector’s reported tax expense declined by 34%. 

Mined materials accounted for around 58% of total exports in the first six months of 2023 at R575 billion. 

While South Africa’s mining sector faces a host of challenges, one is often overlooked – the country’s dwindling reserves.

Gold

The gold industry is expected to exist in South Africa for approximately 27 years, with many mines coming to an end before 20 years.

South Africa has approximately 68 Moz of gold reserves left, with 84% concentrated in Gauteng. 

The country’s historic heart of mining, Gauteng, has ten gold mines in operation and one mine in development. 

The Free State has only six years of gold mining left at current rates, with five gold mines in operation and one project in development. 

In Mpumalanga, there are currently seven operational gold mines, with one mine in development. The North-West has two gold mines. 

The closure of gold mines will likely have a significant economic impact on the affected regions. For example, the five gold operations in the Free State directly employ roughly 24,000 people, and the wider economic ecosystem and supply chain will also be impacted. 

Challenges relating to the effective rehabilitation of gold operations, the re-skilling of individuals, and the possible restructuring of operations for gold producers remain uncertain.

Platinum Group Metals

On average, there are 38 years left of PGM mining from operating mines in South Africa at current depletion rates. 

South Africa has approximately 261 Moz of PGM reserves from operational mines, with 72% in Limpopo and 28% in the North West. 

South Africa has significant PGM reserves, with the majority located in Limpopo. However, it is important to note that a significant portion of these reserves are concentrated in a single mine.

The North West has fewer years of available reserves, but the province is home to the bulk of South Africa’s refining capacity.

While mining in the North West may indicate fewer years of available reserves than in Limpopo, given the bulk of South Africa’s refining capacity, companies with refining capabilities can continue maintaining a footprint within the province.

PGMs are expected to play a key role in the efforts to decarbonise industries, and the World Platinum Investment Council projects a supply deficit to exist within the platinum market in the future.

Coal

South Africa has approximately 5,106Mt of coal reserves from operational mines. At current depletion rates, there are 41 years left of mining on average.

Mpumalanga is South Africa’s coal powerhouse with 2,485 Mt of reserves, attributable to 27 different collieries in operation. 

Limpopo has 2,585 Mt of reserves, 99% of which is attributable to a single mine. 

There are currently no mines placed under care and maintenance, but there are several developments being undertaken, with the capacity to add 403 Mt to existing reserve bases.

There are currently four projects in development in Limpopo, which in total add 426 Mt to the existing reserve base, as well as exclusive resources declared for these projects amounting to 7,443 Mt. T

his amount represents more than 100% of the current coal reserves in South Africa, which indicates that coal mining in Limpopo can practically continue well beyond the existing average period of mining left.

Iron ore

As of 30 June 2023, South Africa has approximately 696.48 Mt of iron ore reserves, which will last for approximately 13 years at current production rates. 

Most of these reserves are concentrated in two mines, which will last approximately 14 years. The remaining iron ore operations have approximately 9 years of mining left. 

There is only one iron ore mine in development, but its resources are not expected to significantly impact the number of years left of iron ore mining in South Africa.

Iron ore mining in the Northern Cape is expected to be depleted within the next two decades, which will significantly impact the province. 

The iron ore operations in the Northern Cape directly employ around 18,000 people and support a number of stakeholders in the region.

It is essential that the challenges faced by bulk commodity miners, such as manganese and iron ore, are addressed to extend mining in the province. 

This could involve investing in exploration to develop the country’s resource base or finding ways to extend the life of existing mines.