The mining industry in South Africa faces multiple challenges and pressure with the decline of iron ore prices. At $57.02 a ton Iron ore has fallen to a seven-month low. Let us take a closer look at South Africa’s mining industry:
The mining industry in South Africa faces multiple challenges and pressure with the decline of iron ore prices. At $57.02 a ton Iron ore has fallen to a seven-month low.
South Africa has an extensive tradition with Mining
South African soil has been blessed with many natural resources. The country is a major exporter of gold and diamond, which makes up most of its export revenues. Similarly, the iron ore reserves in the country are in abundance and constitute the main fuel for the country’s economy. The mining industry in South Africa is huge and employs more than 450,000 employees each year. The industry contributes more than 7% towards South Africa’s Gross Domestic Product (GDP).
For over a century, mining operations have boomed the South African economy, making it a leading exporter of coal, gold and diamond to other countries. Let us take a closer look at South Africa’s mining industry:
South Africa has huge coal reserves, which account to 3.5% of all coal reserves in the world. Similarly, coal production in South Africa accounts for 3.3% of total coal produced globally. The country ranks 6th among the highest coal exporting countries and most of the country’s electricity is provided by coal-powered plants which contribute 81% to total power generation. Current estimates suggest that South Africa has enough coal reserves to last over a century.
The African region is known to be rich in gold reserves of which, South Africa is the most blessed. Witwatersrand basin in South Africa is the world’s largest gold resource. Due to falling gold prices, South African gold mining industry’s profits have lowered and are marginal at best. The overall production has reduced in the industry and accounts for 5% of gold mined globally. The effect of falling gold prices has evidently reduced job opportunities in the sector.
Iron Ore Mining
With plunging lows of $57 per ton, South Africa’s iron ore industry is facing its toughest time. The industry’s contribution towards its GDP is 7% and creates thousands of job opportunities in the region. However, current decline in prices puts some of the top companies involved in iron ore production in a tricky situation, as profits are hard to make.
South Africa has rich sources of diamond and is one of the leading exporters of diamonds in the world. The country has an annual capacity to produce more than 10 million carats of diamonds from its two main sources, The Venetia mine and the Finsch mine. For over two centuries, diamond extraction remains a strong benefactor to the country’s economy.
To conclude, mining operations in South Africa plays a major and vital role in stabilizing its economy. The country has rich sources of coal, diamond, gold and iron ore. Despite a challenging situation for the iron ore industry, South Africa’s mining operations will play a strong role in supporting the country’s economy and increasing its GDP.