Mining Indaba 2017: The mining industry as a prism for the lethargic industrial economy
The Minister of Mineral Resources, Mr Mosebenzi Zwane, addressed the African Mining Indaba in Cape Town against a background of hostile and uncertain domestic mining policy. The mining industry is in some respects a ‘canary in the coal mine’ for South Africa’s broader industrial economy - the net decline in the number of mining jobs since 1994 reflects the broader malaise in the industrial economy.
Yet the minister failed to soothe investor concerns reflecting the government’s broader inability to stage a growth recovery. The paradox is that such a recovery is the single most important thing necessary to secure the long term stability of the current government.
South Africa spent four years of the 1980s at economic growth rates of on or below 0%. The first three years of the 1990s each saw negative rates of growth. The pattern changed after the transition and between 1994 and 2003 South Africa averaged growth rates of 3.3%. Then for a brief four years between 2004 and 2007 growth rates rose to average 5.2%.
The combined effects of the ANC’s policy conference in December of 2007, the 2009 global financial crisis, and concomitant pull back in commodity prices were too much for the South African economy to withstand. Growth levels sank to just over 3% in 2008, turned negative in 2009, rebounded off that low base to touch 3% again in 2010 and 2011, and then retreated steadily bottoming at 0.4% in 2016. Since 2008 growth rates have averaged just 1.7%.
Our analysis of the growth pattern revealed the following things: