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||32.78||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.
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.
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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.