PwC: SA miners pressurized but dug deep for growth

South Africa's mining sector continues to show resilience and growth, according to the latest South Africa Mines report by auditing firm, PwC. The report revealed a significant jump in total market capitalization, which surged by over 400 per cent year-on-year to $1.4 trillion in the current year. Andries Rossouw, Utilities and Resources Leader at PwC Africa Energy, shared key insights from the report in an interview with CNBC Africa. Rossouw highlighted the industry's exceptional performance, with companies recording a 63% increase in profitability over the past 12 months up to June. He attributed this success to record prices for key minerals such as platinum, gold, iron ore, and coal. The mining industry's ability to bring supply back to pre-COVID levels within the last six months allowed them to capitalize on these record prices. One of the key takeaways from the report was the equitable sharing of profits within the industry. Rossouw emphasized that employees received a significant share of the value added, followed by the government and dividends. Mining companies also retained funds to settle debts and invest in the future, highlighting a collaborative approach among stakeholders. The effective tax rate in the South African mining industry stands at 27%, comparable to global standards. Rossouw noted that the country's royalty regime was progressive, ensuring a fair distribution of profits between the government and mining companies. This approach supported the industry in both profitable and challenging years. Shareholders in the mining sector have seen substantial returns this year, with special dividends reaching 76 billion rand. Companies like Anglo-Sabanya and Anglo-American Platinum declared significant dividend payouts, rewarding patient investors in the sector. Despite the industry's growth, discussions around the mining charter and community involvement remain critical. Rossouw emphasized the importance of stakeholder engagement, highlighting the need for collaboration between mining companies, government, and local communities. Addressing socio-economic challenges around mining operations is key to maintaining a social license to operate and preventing disruptions that could impact both communities and companies. The conversation also touched on the contentious issue of mining ownership, with Rossouw referencing a court judgment on 'once empowered, always empowered.' He highlighted the complexities of doing business in a country with a complex history and emphasized the need for ongoing dialogue and collaboration to navigate these challenges. Rossouw's insights shed light on the mining sector's impressive growth and the collaborative efforts driving its success. As South Africa's mining industry continues to thrive, a focus on equitable profit sharing, stakeholder engagement, and addressing socio-economic challenges will be essential for long-term sustainability.