Cape Town - South Africa's mining sector has failed to capitalise on escalating commodity prices and has performed poorly in recent years when compared to the mining sectors of other countries, the Finance Minister Pravin Gordhan revealed today.
The Medium Term Budget Policy Statement, presented in Parliament, revealed that while the country's mining sector grew by 6.3% in the first half of 2011, when compared to the same period the year before, it had not experienced the same growth over the last few years as the mining sector of similar countries.
Compared to Chile where the mining sector grew 12% between 2001 and 2008, as well as 30% in Australia and 44% in Brazil between 2003 and 2010, growth in South Africa's mining sector between 2001 and 2008 was flat.
Added to this, in South Africa investment in the sector during the 2000s grew by 7%, while it shot up by 24% in Australia's mining sector.
Gordhan said while South Africa had benefited from a 16.3% increase in the production of platinum in the first half of 2011 when compared to the same period last year, in the year to August the mining sector had contracted by 4%, with sharp falls in diamonds and gold - despite a 12% increase in primary commodity prices.
Production was disrupted by strikes and safety stoppages, Gordhan said.
He said several factors contributed to the sector underperforming, these included uncertainty in the regulatory environment governing the transfer of mining rights, operational inefficiencies in the rail system and high port charges, exchange rate volatility, production stoppages owing to electricity shortages and increasing costs and risk to mine gold which was now being mined at deeper levels than before.
He said the debate over nationalisation had also fed uncertainty among investors.
Meanwhile, the manufacturing sector declined by 7% in the second quarter compared to the same period last year, after growing 14.5% in the first quarter. Some of the decline was attributed to the fall in vehicle production with the delay in input supplies from Japan.
The agricultural sector has contracted in each of the first two quarters of this year, largely as a result of poor weather conditions that affected harvests.
