South Africa Mining Report

Providing expert analysis, independent forecasts and competitive intelligence on the mining.

Report includes: BMI Industry View, Industry SWOT Analysis, Industry Forecasts, BMI's Petrochemicals Risk Reward Index, Economic Forecasts, Company Profiles and Global, Regional and Country Industry Overviews.

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South Africa Mining Report
Product Price
$1,295.00

BMI View: South Africa's mining sector will face persistent headwinds due to labour unrest, mineral price weaknes s, further divestments and retrenchment.

South Africa Mining Industry Value Forecast
2015e 2016f 2017f 2018f 2019f 2020f
e/f = BMI estimate/forecast. Source: BMI calculation, UN Data
Mining Industry Value, USDbn 32.78 26.73 26.51 26.25 26.64 26.66
Mining Industry Value, USDbn, % y-o-y 0.40 -18.45 -0.82 -0.97 1.49 0.05

Latest Updates And Structural Trends

  • Coal: As Anglo American is keen to offload the majority of its South-African assets, this could result in a significant decline in the country's coal production growth. As such, we revised down our 2016 and 2017 coal production forecast from 1.3% to -4.0% and 1.0% to -1.5%, respectively. Despite this, South Africa, which is Sub-Saharan Africa (SSA)'s largest coal producer, with a 94.6% share of regional coal production in 2015, will remain the region's largest coal producer. We forecast South Africa's coal production to grow from 252million tonnes (mnt) in 2016 to 264mnt in 2020. This would represent average annual growth of 0.1% during 2016-2020, slightly higher than the average 0.9% decline during 2010-2014.

  • Gold: Although the DRC, Zambia and Mozambique will be the region's growth bright spots, South Africa will remain SSA's largest mining country in terms of MIV. For instance, South Africa's MIV will total USD26.7bn in 2016, whereas DRC, Zambia and Mozambique's MIV will total just USD4.3bn, USD1.3bn and USD0.7bn, respectively. However, South Africa's mining sector will continue to face a myriad of challenges from a combination of low mineral prices, elevated production costs and growing regulatory risks. Both low gold prices and ongoing wage negotiations will continue to hurt the sector's growth output. Beyond 2016, we forecast output to average annual growth of 0.2% during 2016-2020, with output totalling 4.53moz by 2020.

  • Iron Ore: We have revised up our iron ore forecasts to 2020. We expect iron ore prices to average USD48.0/tonne during 2016 and USD43.0/tonne in 2017, up from our previous forecasts of USD38.0/tonne and USD40.0/tonne, respectively ( see: 'Iron Ore: Chinese Stimulus Only Short-Term Boost To Prices', May 5). Our upwards revision is predicated on the strong H116 iron ore price rally due to increasing demand from Chinese steel mills. As stated above, we expect prices to fall in the latter half of 2016 as Chinese ore demand will weaken due to declining demand from steel producers ( see: 'Renewed China Weakness Will Limit Price Gains', April 26). We expect prices to head lower in 2017 as the H116 rally will result in high-cost iron ore producers coming offline at a slower pace than we initially expected. In addition, the global iron ore market is going to continue to see strong supply from low-cost producing countries Australia and Brazil, the world's second and third largest producers, respectively, which will partially offset the slowdown in Chinese iron ore production.

  • The country's Iron ore exports to China will slow on the back of the country's slowdown in steel production over the coming quarters. In the first four months of 2016, ore exports to China fell by 3.0% y-o-y, following 6.2% growth in 2015.

  • Platinum: South Africa's platinum production will decline from 3.8moz in 2016 to 3.5moz in 2020. This would represent an average annual contraction of 2.7% during 2016-2020, following an average annual decline of 4.8% during 2011-2015. Previously, in 2015, South Africa's platinum output grew by 4.0% on the back of a stronger-than-expected recovery in production of the sector's top three producers, namely Lonmin, Anglo American Platinum (Amplats) and Impala Platinium. The strong recovery this is primarily due to production recovering following a 16.0% decline in 2014, resulting from a five-month strike at Lonmin's Marikana mine.

  • Palladium: Production growth will slow significantly on the back of low prices, rising operational costs, increasing government intervention and continued labour unrest. We forecast South Africa's palladium output to grow marginally from 2.37moz in 2016 to 2.45moz in 2020. This would represent an average annual growth of 0.9% during 2016-2020.

BMI Industry View
7
Table: South Africa Mining Industry Value Forecast
7
Latest Updates And Structural Trends
7
SWOT
9
Industry Forecast
11
Coal: Modest Recovery Post-2016
11
Latest Updates
11
Table: Coal Production Forecast (South Africa 2012-2020)
11
Table: South Africa - Major Coal Projects & Expansions
12
Structural Trends
12
Gold: Growth To Grind To A Halt
18
Latest Updates
18
Table: Gold Production Forecast (South Africa 2012-2020)
18
Structural Trends
19
Iron Ore: Low Prices To Dent Growth
24
Latest Updates
25
Table: Iron Ore Production Forecast (South Africa 2012-2020)
25
Table: South Africa - Major New Iron Ore Projects & Expansions
26
Structural Trends
26
Platinum: Production Downturn Due To Rising Costs
28
Latest Updates
28
Table: South Africa - Platinum Mine Production & Growth
28
Structural Trends
28
Palladium: Sector To Face Numerous Challenges
34
Latest Updates
34
Table: Palladium Production (South Africa 2014-2020)
34
Table: South Africa - Palladium Projects
34
Structural Trends
35
Industry Risk Reward Index
37
South Africa Risk/Reward Index
37
Rewards
37
Risks
37
Africa - Risk/Reward Index
38
Key Takeaways
38
Latest Revisions
39
Table: Africa - Mining Risk/Reward Index
40
Regulatory Development
41
Trade & Investment Risk Analysis
41
Commodities Outlook
45
Table: BMI Commodities Price Forecasts
45
Competitive Landscape
46
Table: South Africa - Largest Mining Companies' Financial Data
47
Company Profile
48
Global Company Strategy - AngloGold Ashanti - Q3 2016
48
Table: Select Commodities - Price Forecasts
50
Company Strategy
52
Table: AngloGold Ashanti - Key Financial Data
53
Global Company Strategy - Anglo American - Q3 2016
54
Table: Select Commodities - Price Forecasts
55
Latest Results
57
Company Strategy
58
Table: Anglo American - Financial Data
60
Global Company Strategy - Impala Platinum - Q3 2016
61
Company Strategy
63
Table: Impala Platinum - Key Financial Data
66
Regional Overview
67
Sub-Saharan Africa Overview
67
Table: SSA - Government Involvement In Mining Sector
73
Methodology
75
Industry Forecast Methodology
75
Sources
76
Risk/Reward Index Methodology
77
Table: Weighting Of Indicators
78

The South Africa Mining Report has been researched at source and features BMI Research's mining and commodity forecasts for metals, minerals and gems, covering all major indicators including reserves, production, exports and values. The report also analyses trends and prospects, national and multinational companies and changes in the regulatory environment.

BMI's South Africa Mining Report provides industry strategists, service companies, company analysts and consultants, government departments, trade associations and regulatory bodies with BMI's independent forecasts and competitive intelligence on the mining industry in South Africa.

Key Benefits

  • Use BMI's independent industry forecasts on South Africa to test other views - a key input for successful budgeting and planning in this mining market.
  • Target business opportunities and risks in South Africa's mining sector through our reviews of latest mining industry trends, regulatory changes and major deals, projects and investments in South Africa.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity), Key Projects Tables and Competitive Landscape Tables.

Coverage

BMI Industry View

Summary of BMI’s key forecasts and industry analysis, covering mining reserves, supply, demand and prices, plus analysis of landmark company developments and key changes in the regulatory environment.

Industry SWOT analysis

Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the mining sector and within the broader political, economic and business environment.

BMI Industry Forecasts

Historic data series (2009-2013) and forecasts to end-2019 for key industry and economic indicators, supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:

  • Mining industry: Industry size (USDmn), real growth (%), % of GDP, employment (‘000), workforce as % of total workforce, average wage (USD).
  • Output: Production volumes (‘000 tonnes, carats etc.) for all major metals, minerals, ores and gems mined in each state, including bauxite, copper, gold, coal, lead, silver, tin, titanium, uranium, zinc etc.
  • Exports: Value of exports (USDmn) for all major metals, minerals, ores and gems mined in each state.
  • Commodity markets: Global demand, supply, stocks and benchmark prices (USD) for aluminium, copper, lead, nickel, tin, zinc, gold and steel.

BMI’s Mining Risk Reward Index

BMI’s Risk Reward Indices provide investors (mining companies and support service providers) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.

Competitive Landscape Tables & Analysis

Comparative company analyses and tables detailing USD sales, % share of total sales, number of employees, year established, market cap/NAV, ownership structure, production and % market share.

Key Projects

Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by metal/ore.

Company Profiles*

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

Sources

The Mining reports are based on an extensive network of primary sources, such as multilateral organisations (UN, WB, IMF), national chambers of commerce and industry, national statistical offices, government ministries and central banks, and multinational companies.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.