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: 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: South Africa's iron ore production growth will slow as weak iron ore prices will force miners to cut capital expenditure (capex) and halt new projects from coming online. Further, as Anglo American is keen to offload the majority of its South-African assets, including Kumba Iron Ore, this could result in a significant decline in the country's iron ore production growth. As such, we revised down our production growth forecast from -1.5% to -3.0% and from -1.5% to -2.5% for 2016 and 2017, respectively.

  • Platinum: 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 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. Despite this, country'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.

  • Palladium: We have revised up our palladium production forecast on the back of a stronger than expected production recovery in 2015. In 2015, the country's output grew by 10.9% annually, with production growing from 2.12million ounces in 2014 to 2.35moz in 2015. Despite this upwards revision, production growth will slow significantly on the back of low prices, rising operational costs, increasing government intervention and continued labour unrest.

BMI Industry View
7
Table: South Africa Mining Industry Value Forecast
7
Latest Updates And Structural Trends
7
SWOT
9
Industry Forecast
11
Coal: Growth To Pick Up Beyond 2017
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
19
Latest Updates
19
Table: Gold Production Forecast (South Africa 2014-2020)
19
Structural Trends
21
Iron Ore: Weak Prices To Curb Growth
25
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 (2014-2019)
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
41
Regulatory Development
42
Trade & Investment Risk Analysis
42
Commodities Outlook
46
Table: BMI Commodities Price Forecasts
46
Competitive Landscape
47
Table: South Africa - Largest Mining Companies' Financial Data
48
Company Profile
49
Global Company Strategy - AngloGold Ashanti - Q2 2016
49
Overview
51
Strategy
51
Risks
52
Latest Results
53
Table: AngloGold Ashanti - Key Financial Data
53
Global Company Strategy - Anglo American - Q2 2016
54
Company Strategy
57
Latest Results
59
Table: Anglo American - Financial Data
61
Global Company Strategy - Impala Platinum - Q1 2016
62
Table: Impala Platinum - Key Financial Data
67
Regional Overview
69
Table: SSA - Government Involvement In Mining Sector
74
Methodology
76
Industry Forecast Methodology
76
Sources
77
Risk/Reward Index Methodology
78
Table: Weighting Of Indicators
79

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.