Peter Major: Here’s what government should do to help boost SA’s gold production

Following the release of South Africa's GDP data for the second quarter, which revealed a significant decrease in the mining and quarrying industry by 73.1%, there are signs of a potential recovery for the country's miners. Peter Major, Mining Director at Mergence Corporate Solutions, shared insights during a recent CNBC Africa interview on what the government can do to help boost gold production in the nation. The mining industry faced challenges due to the global COVID-19 lockdowns, leading to a decline in production across various mineral products like platinum and gold. However, Peter Major believes that there is hope for a rebound in the mining sector. Major pointed out that while gold mining is in a secular decline since 1987, other minerals such as iron ore, PGMs, chrome, and manganese have seen significant benefits from the market prices and the depreciating rand. He emphasized that the mining sector is poised to recover at a faster rate compared to manufacturing. The contraction witnessed in the second quarter was primarily attributed to the COVID-19 lockdowns, accounting for about 90% of the decline. Major also acknowledged the positive role played by unions and communities in supporting the industry during these challenging times. When discussing the government's role in revitalizing the mining industry, Major highlighted the need for policy changes surrounding tax and royalty systems, ownership structures, and regulatory procedures. He suggested that revisiting the mining charter to make it more investor-friendly could attract fresh capital into the sector. Major expressed frustration over the self-imposed challenges faced by the gold mining industry due to government policies, stressing that significant improvements could be made with the right interventions. Regarding potential winners in the industry, Major identified platinum as a valuable asset for South Africa, emphasizing the need to balance production levels to prevent oversupply and price depreciation. He also noted the surging prices of platinum group metals like palladium and rhodium, which are contributing positively to mining revenues. Major highlighted the importance of diversifying minerals to capitalize on favorable market conditions, particularly in the iron ore sector. On the topic of gold prices, Major acknowledged a potential rebase in the long-term average price, indicating a positive trend for the precious metal. He suggested that even a slight decrease from current levels could still be profitable for gold mines in South Africa. In terms of attracting fresh capital into the mining sector, Major noted an increase in interest from investors in recent months but stressed the importance of creating a conducive environment to facilitate actual investments. In conclusion, Major urged the government to take proactive steps to stabilize the industry, address regulatory challenges, and create an attractive investment climate to revitalize South Africa's mining sector. While the road to recovery may require significant efforts, the potential for growth and development in the industry remains promising for the nation.