BMI View: South Africa's mining sector will face persistent headwinds due to labour unrest, mineral price weaknes s, further divestments and retrenchment.
|e/f = BMI estimate/forecast. Source: BMI calculation, UN Data|
|Mining Industry Value, USDbn||32.80||29.00||29.20||29.20||30.20||30.60|
|Mining Industry Value, USDbn, % y-o-y||0.40||-11.43||0.47||0.23||3.31||1.17|
Latest Updates And Structural Trends
Coal: On August 29 2016, Coal India approved signing of a memorandum of understanding (MoU) with the South Africa government-controlled African Exploration Mining and Finance Corporation. Areas of collaboration include identification, acquisition, exploration, development and operation of coal assets in South Africa. This confirms our long held view of increasing Indian investment into South Africa's coal sector.
Gold: We have raised our gold price forecasts for 2016 to USD1,275 per ounce (/oz) from USD1,150/oz. A recalibration of expectations for the global monetary policy trajectory by investors and equity market turmoil has combined to create a more positive environment for gold prices than we previously anticipated.
Iron Or e: We have revised up our iron ore forecast to 2020 and expect iron ore prices to average USD53/tonne in 2016 and USD45/tonne in 2017, up from our previous forecasts of USD48/tonne and USD43/tonne, respectively. Our upwards revision is predicated on sustained ore demand from Chinese steel mills and domestic iron ore production coming offline at a faster pace than we had anticipated, reducing excess ore capacity. However, the latter's upside effects on ore prices will be mitigated by elevated iron ore prices, which will slow the pace of high-cost iron ore producers coming offline over the coming quarters.
Platinum: On September 13, Anglo American Platinum (Amplats) announced that it would stop furnace number one at the firm's Waterval smelter in South Africa due to a leak. The furnace represents circa 20% of Amplat's smelting capacity. As a result, platinum production for the 2016 financial year is expected to be impacted by 70-100 thousand (koz) platinum ounces.
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.
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.
- 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.
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.
Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by metal/ore.
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.
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.