How COVID-19 will cost SA’s mines R1.5 billion-a-day

PUBLISHED: Tue, 24 Mar 2020 18:59:16 GMT
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By Chris Bishop

As South African mines prepare to shut down, in the fight against the spread of COVID-19, the chief economist for the Minerals Council of South Africa warned that the industry was set to lose R1.5 billion-a-day ($86 million) at a time when it can ill afford it.

For more coverage on COVID-19 visit: https://www.cnbcafrica.com/covid-19/

The government lockdown from midnight on March 26 could see many of South Africa’s four million workers lose their jobs as industries are forced to draw in their horns in the name of safety.  

Even though mining has yet to see its first case of Coronavirus, it is considered one of the country’s most vulnerable industries. More than 300,000 of the 450,000 mineworkers, in South Africa, work deep underground, in sweaty heat, at depths of up to four kilometres.

Henk Langenhoven, the chief economist for the Minerals Council of South Africa- the body that represents most major miners – calculates that the industry will lose R1.5 billion-a-day in a business that earns 24% of the country’s foreign currency every year.

“It is a very difficult time for the mining industry. It is a pity that many of the prices of commodities were rocketing recently now the industry will not be able to take full advantage of them,” says Langenhoven.

Langenhoven also said the shut down in mining will neither be swift, nor easy.

“The logistics are mind-boggling. It takes up to a week to close down a chrome smelter. Care and maintenance of mines is also costly”

President Cyril Ramaphosa, when he announced the shutdown on Monday in Pretoria, called on mines to carry out care and maintenance, unless they could operate remotely with machinery. Those operations are few and far between in South Africa. President Ramaphosa made no bones about the impact on South Africa’s flagging economy that faces yet another downgrade from the ratings agency Moody’s on Friday.

“Business will suffer from this shutdown,” Ramaphosa said.

The only light at the end of a long tunnel is that the government has set up a so-called Solidarity Fund to raise money to ease the blow of hardship and job losses. It will be chaired by legendary South African entrepreneur Gloria Serobe.

Billionaires Nick Oppenheimer – whose family fortune came largely from mining – and Johann Rupert pledged a billion rand each to the fund along with R150 million in seed capital put forward by the government.      

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