South African investment

Mining companies have committed a total R78 billion to the development, over the next three years, of capital projects across South Africa.

According to the Johannesburg-based South Africa Chamber of Mines, the country still has a sound mining export foundation based on gold, platinum and coal, despite weaker coal and platinum prices. (The decline in the rand’s value means production costs fall when they are set alongside the products’ dollar-denominated sales.)

Roger Baxter, chief economist with the chamber, says platinum, gold and coal are helping to ensuring that South Africa’s exports continue to grow.

Of the R78 billion investment, 35% is spread across a number of platinum projects, corresponding to the stated production targets of several companies that produce platinum group metals.

Anglo Platinum says it intends to increase platinum production to 3.5 million oz. per year by 2006; Impala Platinum also intends to boost annual production, from nearly 1.1 million oz. to 1.6 million oz.; and earlier this year, Lonmin said its South African mines were on-track to producing 1 million oz. platinum per year by 2007.

Investment in gold mining operations in the country constitutes about R19.5 billion, key recipients being Placer Dome’s South Deep mine and Avgold’s development project at the Target mine.

As these mines lift production, Baxter says, the country’s annual gold output will rise for the first time in nine years. This year, output was a mere 400 tones — the lowest level since 1956.

The Chamber of Mines expects gold production to increase to 405 tons in 2002 and to 408 tons by 2004.

Of South Africa’s total merchandise exports, primary mining exports make up 35%. When “beneficiated products” or value-added items are included, the contribution of minerals to South Africa’s exports exceeds 60% of the total.