BMI View: South Africa's mining sector will face persistent headwinds due to labour unrest, a muted price recovery, further divestments and retrenchment.
|e/f = BMI estimate/forecast. Source: BMI calculation, UN Data|
|Mining Industry Value, USDbn||32.80||29.00||29.10||29.20||30.10||30.50|
|Mining Industry Value, USDbn, % y-o-y||0.40||-11.45||0.28||0.20||3.29||1.20|
Latest Updates And Structural Trends
Coal: The global seaborne thermal coal market will loosen over the coming months and we thus expect prices to head lower in 2017. Prices will not sustainably return to the 2016 lows around USD50.0/tonne and we expect stabilisation in a range of USD60-70/tonne. As a result, we have raised our 2017 and 2018 average price forecast to USD65.0/tonne and USD63.0/tonne from our previous forecasts of USD53.0/tonne and USD57.0/tonne, respectively. These forecasts imply significant declines over the coming quarters from the October 28 three-month price of USD100/tonne and plot a weaker trajectory than the current ICE futures curve. For instance, the ICE Newcastle Coal December 2017 contract is currently trading at USD72.0/tonne. Despite this negative outlook, our forecasts are significantly more positive than market expectations as gauged by a Bloomberg consensus average forecast of USD57.0/tonne for 2017.
Gold: We have revised down our gold price forecasts for 2017-2018 following the election of Donald Trump as US President. We now forecast an average of USD1,300/oz in 2017 compared to our previous forecast USD1,400/oz. Looking further ahead, rising inflation pressures will drive a rebound in gold prices and we have left our bullish forecasts for 2019 and beyond unchanged.
Iron Or e: We have revised up iron ore forecast out to 2020 and expect iron ore prices to average USD55/tonne in 2017 and USD48/tonne in 2018, up from our previous forecast of USD45/tonne in both 2017 and 2018. Our upwards revision is predicated on our core view turning more bullish towards metal prices. We now see it likely that infrastructure stimulus measures by China will stay strong through to the end of 2017, rather than our previous core view for stimulus measures to fade in H216.
Platinum: South Africa's platinum sector will remain prone to strikes as wage negotiations between the country's main mining unions and miners will continue to pose a key risk to our platinum production outlook. Despite this, in November 2016 a wage agreement has been reached between the Association of National Mineworkers and Construction Union (AMCU) and Lonmin, Amplats and Impala. Amplats and AMCU agreed to pay hikes of between 7.0-12.5% annually over the next three years, depending on the level of employment.
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.