https://www.engineeringnews.co.za

2015 was South African ecomony’s annus horribilis but there is hope yet

15th January 2016

By: Terry Mackenzie-hoy

  

Font size: - +

As we begin this new year, we should be looking forward and making plans.

However, looking back, 2015 was probably the worst year in South African history from an economic perspective.

In our little consulting practice, we survived, but took a big strain. While we did some really sweet architectural acoustics design projects, there were fewer than years before.

We find in just about every architectural acoustics design that the project manager, the client or the quantity surveyor, or all three, throw out all acoustic finishes on the basis of cost, frequently condemning the inhabitants of various buildings to noise levels and a lack of privacy found in American prisons – or, if you like, prisons with the Americans.

Many years ago, there was a strong move among people of my age who had done national service to emigrate. About 25 years ago, many people said, you know, it is not going to get better. Then I would put aside the emotional argument about what we owed or did not owe South Africa and I would say, you know, this whole country has a huge economic flywheel, and it is called diamond, gold, platinum and coal mining. We have the cheapest electricity in the world, I would say, and by now (I would say) not a single person believes that apartheid was a good idea. Consequently, we cannot but succeed.

In this last year, the price of platinum mining company Lonmin’s shares dropped by 95%. The net asset value of Lonmin is some billions of rands. A quick calculation shows that, if you just sold the whole mine for scrap and land value, then the share price could never fall much below 50% of its trading price. Guess what? It dropped by 95%. The collapse was partially due to the collapse in the platinum price by 50% since 2010. The police shooting of striking miners affected the sentiment of investors. But there is a third reason: investors are starting to think that South Africa is not worth it.

The gold mining sector has not done much better – strikes, electricity hikes and an unmoving gold price.

In the diamond mining sector, De Beers has sold its Kimberley Mines. This should be three-inch-high headline news. But it is not. De Beers made money out of Kimberley diamonds for 127 years. In a media release, it stated: “De Beers concluded that the best way to secure a future for Kimberley Mines was to find an operator better suited to process the remaining resources in a long-term, sustainable way, ensuring continuation of employment and economic activity in the Northern Cape.” While this may be true, I personally doubt it. I think that De Beers sees the writing on the wall. In bold letters.

Meanwhile, Anglo American Platinum has been trying to sell its Rustenburg operations for over a year now, with no buyer in sight.

In the coal sector, Glencore is trying to conclude a deal to sell the Optimum colliery. Some time ago, when the colliery retrenched 359 people, then Mineral Resources Minister Ngoako Ramatlhodi pulled its mining licence. It was restored, but this action probably frightened investors who might have been willing to take a long view of commodity prices. As reported in the Financial Mail: “Any prospective investors have been reminded that they have to deal not only with the militant workers of Rustenburg, but also with an irrational government if they get involved [in] labour-intensive mining operations in South Africa.”

It was all going to be so brilliant but now government has just about messed up everything it could mess up: mining, electricity, education . . .

But for all this, I do look forward. Many people who are not my age cannot remember the utter despair that gripped this country (or, at least, some of us) when, every few weeks, a new massacre of strikers was reported. Many cannot remember just how enormously stupid many of the Ministers of the previous administration were. How cripplingly inept. Our present masters of government are no better but they can get better. So, I am looking forward to 2016. Just remember that, in 1942, Britain nearly lost World War 2. Look at it now – one of the most stable countries in the world. We can get there from here.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

Comments

Showroom

Flameblock
Flameblock

FlameBlock is a proudly South African company that engineers, manufactures and supplies fire intumescent and retardant products to the fire...

VISIT SHOWROOM 
SMS group
SMS group

At SMS group, we have made it our mission to create a carbon-neutral and sustainable metals industry.

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.079 0.133s - 144pq - 2rq
Subscribe Now