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President Cyril Ramaphosa says rising metal prices will play a significant role in driving the recovery of the economy from the current Covid-19 downturn, which has seen unemployment rise to record levels, as the country battles a new surge in infections.
Commodity prices have been on an upward trend, with local producers of platinum group metals, coal and iron ore prices reporting significantly improved earnings that have helped offset the impact of Covid-19 on operations.
“High commodity prices and rising global demand is good for our economy, particularly the mining sector,” said Ramaphosa in his weekly letter to the nation on Monday, adding that the prices surge will “play a significant role” in accelerating economic recovery.
The pandemic has severely impact the country’s weak economic growth, with domestic expectations by the SA Reserve Bank, Treasury and local economists seeing growth of anywhere between 3 percent and 5 percent. The World Bank in June revised the South African economy’s growth outlook from 3,3 percent to 3,5 percent while the official unemployment rate has increased to 32,5 percent.
Local mining executives have over the past few years voiced concern that the industry had lagged other mining zones on the continent and the world in terms of investment, due to unfriendly policy framework and the country’s unstable energy supply, and Ramaphosa stated that government faced a host of demands for infrastructure support.
“We need to ensure that the returns from mining are used to promote more employment-friendly activities, and that they empower mineworkers and mining communities,” said Ramaphosa.
Deep inequalities
He acknowledged that mining had historically been central to the country’s “deep inequalities” and that ownership was still concentrated among few large companies, while workplaces, pay scales and communities around mines were “still largely shaped by discriminatory relationships established under apartheid”.
“The challenge is to manage from the mining boom while laying the groundwork for more diversified, inclusive and environmentally sustainable growth.”
The commodity price boom has been a significant contributor to the R54 billion trade surplus collected by the South African Revenue Service (SARS) in May, which was due to a 1,5 percent jump in exports between April and May. Mining goods account for over half of the South African export goods and adds 10 percent to the GDP. — News24.com.
Online Reporter