With the onset of the mineworker strikes last week Thursday, it may be interesting to note the general manner in which international investors attending the African Mining Indaba will react to debates on the labour unrest in South Africa.
The Investing in African Mining Indaba will be held at the CTICC in Cape Town from 3-6 February and this year celebrates its 20th annual congregation of some of the highest investors and decision-makers in African mining. It is believed to be the one event that brings the macrocosm of African mining together.
As the biggest congregation of mining delegates in the world, the Mining Indaba acts as the best marketing opportunity for mining companies, allowing for all investors and stakeholders to get up to speed with the most current economic developments in the industry.
Big investors to discuss current strikes at the Indaba
Given the current mineworker strikes, stakeholders in African mining are believed to be initiating a debate regarding the labour issues so often encountered in South Africa.
In a recent article, Carel Smit, KPMG Africa’s head of energy and natural resources, stated that one of the major themes at this prestigious event will, in fact, be the continuous strikes. He continued to state that the strikes initiated by AMCU (the Association of Mineworkers and Construction Union), along with its continuous disputes with NMU (the National Union of Mineworkers), could influence investor discernments of the South African mining industry.
Ian Coles, global mining head at Mayer Brown, says that “The Indaba is a litmus test for the vibrancy of the industry in any particular year.”
Should big-time investors get the full report on the current state of mining in South Africa, it may be likely that investments will drop to such a degree that the mining industry in South Africa will have to face increasingly serious implications.
How will the strikes affect export profits?
According to a recent report, the two-day strike initiated by NMU in September cost mining companies as much as R349 million, as reported by the Chamber of Mines. Government data reveals that China buys about 11 percent of South Africa’s exports from January to November. If these exports don’t maintain their produce, where will South Africa find viable income to keep its mining industry afloat?
As the Rand value recently dropped in value to about R11 to the dollar, one would expect exports to gain exceptional benefit from this drop, yet the fact that strikes are again underway results in decreased production levels - there may not be enough platinum to export in due time.
Whether investment in South African mining will drop due to decreased production and subsequent decrease in export is still only speculation. It may be that attendees of the Mining Indaba will discuss the issue and come to a general agreement as to what the best solutions are for the continuous labour troubles in South African mining.
If they fail to rectify this undeniable disaster, there is no telling what the future holds.