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The mining sector has been at the core of the evolution of the South African political economy.
Over the past 100 years, the economy evolved on the basis of two pillars – mining and agriculture.
In the early years, the manufacturing sector grew mainly to service these two industries and provide for a growing domestic consumer base as well as markets in developed countries.
From the turn of the 20th century, with the discovery of diamonds around Kimberley and gold around Johannesburg, the mining industry can be said to have profoundly influenced the country’s spatial patterns of economic development, human settlement and infrastructure networks.
It was the driver of the evolution of South Africa’s manufacturing sector as well as energy sourcing and intensity.
While its proportion of gross domestic product (GDP) has declined especially since 1994, mining’s combined contribution – taking into account direct mining activity, forward and backward linkages and the induced effect – stood at about 18.7% in 2012.
In 2005, it contributed 50% of primary and beneficiated merchandise exports, 50% of Transnet’s rail and ports volume, 16% of electricity demand, 30% of liquid fuels from Sasol’s coal-to-liquid process and 93% of electricity generation from coal power.
According to the Manufacturing Circle: “Manufacturing is also still tied to the mining industry, depending to a large extent on the health of this sector for its own wellbeing. The impact then of the precipitous decline in the mining sector’s contribution to GDP from above 20% in 1980 to 8% in 2016 is clear, alongside a global sourcing strategy by mining conglomerates as they became global players post 1994, as is the uncertainty created by the modern-day Mining Charter.”
Mining’s contribution to the evolution of the country’s skills base is reflected in the fact that one of the country’s premier universities, the University of the Witwatersrand, started off in 1896 in Kimberley as the South African School of Mines.
Similarly, it influenced much of the evolution of South African trade unionism and even the configuration of political parties and political discourse.
The white colonial political establishment reflected dynamics of alliances and conflict among the agricultural and mining moguls, in the earlier years configured around the Afrikaner and English establishments.
Policies on land tenure were developed to meet mainly the needs of the emergent mining sector. As resistance to the apartheid colonial system reached its peak in the 1980s, the captains of the mining industry were among the first sections of the white ruling class to initiate interactions with the banned ANC, seeking accommodation in a negotiated settlement.
It is logical that today contestation around inclusion of black people in the mainstream of the economy plays out most intensely in the mining sector.
This is reflective of a deep sense of grievance around sharing of the sheer wealth of mineral endowments that South Africa commands, estimated by Citibank to be $2.5 trillion – the largest in the world.
There is much contestation around the issue of ownership, and the Chamber of Mines and government have been locked in court battles around a new Mining Charter.
Whatever the detail of the issues under debate, the fact of the matter is that, across all measures of economic empowerment, the sector is still far from reflecting the demographics of the country.
Most of the mineral endowments in the country are estimated to have lifespans that amount to hundreds of years into the future.
Yet South Africa is ranked only fifth in terms of value added to the GDP in US dollars, and fourth in terms of mining employment.
Its investment trends compared with Australia were countercyclical to the mining supercycle of the past decade, a trend that seems to persist in terms of levels of investment against the backdrop of resurgent mineral prices.
The Chamber of Mines estimates that the mining sector expanded by 3.7% and employment by 1.6% last year.
However, according to that year’s chamber survey, in a “more certain and conducive” environment, capital spending stretching over four years could be 84% higher. According to the survey results, the impact on employment creation would be nearly 48 000 people.
A number of factors pertinent to the crafting of a long-term vision account for this, not least the short-termism in the outlook of most mining companies in terms of generating shareholder value; policy uncertainty in a polity that is transforming from a colonial past; poor relations with workers and communities; and persistence of old production as well as management and labour-sourcing methods.
Netshitenzhe is the executive director and board vice-chairperson of the Mapungubwe Institute for Strategic Reflection (Mistra).
This is an edited extract from a draft chapter for Mistra’s research on the political economy of mining in South Africa. Netshitenzhe’s chapter is titled: Towards Mining Vision 2030
