South Africa Mining Report

Published 02 July 2015

  • 108 pages
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  • Includes 3 free updated quarterly reports
$1,295.00
South Africa Mining Report

BMI View: South Africa's mining sector will face significant headwinds as the country's gold and platinum industry will continue to struggle from labour unrest, price weakness and retrenchment. Growth in the country's coal and iron ore sector will be modest, driven primarily by increasing domestic demand.

Vast untapped mineral reserves, supportive government jurisdictions and few obstacles prohibiting foreign investment make South Africa's business environment one of the best on the continent. Despite this, weak mineral prices and continued labour unrest will curb the country's mining sector growth outlook over the coming quarters. We expect South Africa's share of global mined output to decline as other mining jurisdictions experience faster rates of growth. We expect South Africa's gold sector to lose market share, as miners will shift investment to low-cost, high resource opportunities in the rest of the continent such as the Democratic Republic of Congo. In light of the above, we forecast South Africa's mining industry value to grow from USD32.8bn (billion) in 2015 to USD36.0bn in 2019. This represents an average growth of 2.0% year-on-year (y-o-y) over 2015-2019, significantly lower than the average growth of 7.8% observed over 2010-2014.

Coal And Iron Ore To Be Relative Growth Bright Spots
South Africa - Select Mineral Production Growth y-o-y (%)
e/f = BMI estimate/forecast. Source: USGS, EIA, National Sources, BMI

Labour Unrest To Be Major Challenge

Labour unrest will continue to pose a major challenge to the country's mining sector. South Africa's labour unions will continue to push for higher wages over the coming quarters even after wage agreements have been signed. The Association of Mineworkers and Construction Union (AMCU) will continue to push for a doubling of entry-level wages to ZAR12,500 per month. This is considered to be a "living wage" amongst AMCU membership. Rising cash costs combined with weak mineral prices will slash miner's profit...

BMI Industry View
7
SWOT
9
Industry Forecast
11
Coal: Modest Growth, Despite Headwinds
11
Chinese Restrictions To Limit Coal Demand
13
Bright Spots Remain
14
Table: South Africa - Major Coal Projects & Expansions
15
Indian Investment To Support Long-Term Growth
16
Positive Infrastructure Developments
17
Currency Depreciation To Support Operations
17
Table: Coal Production Forecast (South Africa 2011-2019)
18
Diamonds: Growth To Slow Over The Coming Years
18
New Discoveries, Yet Headwinds Lie Ahead
19
Table: South Africa - Largest Diamond Projects
20
Table: Diamond Production (South Africa 2014-2019)
20
Gold: Headwinds To Stagnate Production Growth
21
South Africa To Lose Market Share
25
Potential Positive Upside
26
Table: Gold Production Forecast (South Africa 2014-2019)
26
Iron Ore: Price Weakness To Curb Growth
27
Table: South Africa - Major New Iron Ore Projects & Expansions
30
Power Shortages To Dampen Growth Outlook
30
Table: South Africa: Iron Ore Production Forecast (2014-2019)
30
Platinum: Production Downturn Due To Rising Costs
31
Rising Wages & Retrenchment To Curb Growth
32
Power Shortages & Depleting Reserves To Raise Costs
34
Declining Revenues To Spur Divestment
35
Table: South Africa - Platinum Mine Production & Growth (2014-2019)
37
Palladium: Supply Growth To Wind Down
38
Table: South Africa - Palladium Projects
40
Table: Palladium Production (South Africa 2013-2019)
40
Industry Risk Reward Ratings
41
South Africa Risk/Reward Index
41
Rewards
41
Industry Rewards
41
Country Rewards
41
Risks
42
Industry Risks
42
Country Risks
42
Africa Risk/Reward Index
43
High Risks, Large Rewards
43
Table: Africa - Mining Risk/Reward Index
46
Regulatory Development
47
Trade & Investment Risk Analysis
47
South Africa: Mining Unrest Crib Sheet
50
Core View
50
Latest Developments
51
Key Questions & Answers
52
Commodities Forecast
58
Commodity Strategy
58
Ferrous Metals
58
Iron Ore: Price To Remain Under Pressure In 2015-2016
58
Steel: Subdued Prices Until 2017
60
Non-Ferrous Metals
63
Copper: Subdued Outlook, Despite Recent Rally
63
Lead: Prices Weakness To Continue
65
Nickel: Subdued Prices Due To Weak Demand Growth
66
Tin: Supply Deficits To Underpin Rally In Tin Prices
67
Zinc: Positive Multi-Year Outlook, But Increasing Risks In Months Ahead
68
Table: Select Commodities - Performance & BMI Forecasts
70
Competitive Landscape
71
Table: South Africa - Largest Mining Companies' Financial Data, 2014
72
Company Profile
73
Global Company Strategy - Anglo American - Q3 2015
73
Company Strategy
75
Latest Results
76
Table: Anglo American - Financial Data
77
Global Company Strategy - AngloGold Ashanti - Q3 2015
78
Overview
79
Strategy
79
Risks
80
Latest Results
81
Table: AngloGold Ashanti - Key Financial Data
82
Global Company Strategy - Impala Platinum - Q3 2015
83
Table: Impala Platinum - Key Financial Data
87
Regional Overview
88
Regional Overview - The Four Key Themes For Africa Mining
88
SSA Gold: Stagnation, But DRC To Shine Bright
88
West Africa: Continued Price Weakness To Curb Growth
89
Regulatory Environment To Threaten Growth
91
Mining To Remain Key Contributor To GDP
92
Global Industry Overview
94
Global Overview
94
1
95
2
97
3
98
4
100
5
102
Methodology
104
Industry Forecast Methodology
104
Sources
105
Risk/Reward Index Methodology
106
Table: Weighting Of Indicators
107

The South Africa Mining Report has been researched at source and features Business Monitor International (BMI)'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.

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