Lewes, DE -- (ReleaseWire) -- 02/25/2014 -- The past decade of minimal growth in South Africa's mining sector is set to continue as the country's gold and platinum sectors face diminishing margins and industrial strife. Potential for growth in the iron ore and coal sectors constitute bright spots for the mining industry in the long term. Report forecasts South Africa's mining sector value to grow by an annual average rate of 1.1% over our forecast period, from US$32.7bn in 2014 to US$34.2bn in 2018.
South Africa's share of global mined output is set to decline further as other mining jurisdictions experience faster rates of growth. We expect investment, particularly in gold mining, to be more attracted to low-cost, high resource opportunities in the rest of the continent such as the Democratic Republic of Congo.
South Africa's mining sector is amenable to investment, with few obstacles confronting foreign companies wishing to enter. The government is generally stable and South Africa's business environment is one of the best on the continent. Nevertheless, recent developments in the country's mining regulatory environment have led to serious uncertainty among investors. The government is amending its laws regulating the mining sector with a view to taking a greater share of mineral resource profits and to force greater local beneficiation. A carbon tax has also been proposed and will be potentially implemented in 2015.
Industrial unrest will continue to prove a challenge. The precedent set by Lonmin offering a 22% pay rise for workers in the wake of the Marikana strike in 2012, has provided a benchmark for future pay negotiations. Rising cash costs and diminishing margins will mean that mining companies are increasingly unable to meet these demands, resulting in further labour unrest and strikes. This situation is exacerbated by competition between the two major unions, the NUM and AMCU, who will try to outbid one another in demands for wage increases. Given that mining sector margins in South Africa are already among the lowest in the world and wages account for around 50-60% of mining companies' costs, this will likely make South Africa a less attractive investment destination.
Research anticipates greater Chinese demand for South African iron ore, as supply from India comes sharply offline. We also expect an increase in demand for coal both domestically and from Asia. These two factors constitute the greatest opportunities for the future of South Africa's mining industry.
The report covers detailed industry SWOT analysis,industry forecast, commodities Forecasts, regulatory development, industry trends and overview, competitive landscape and company profiles of major players including AngloGold Ashanti, Anglo American, Impala Platinum.
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