Mining revival must also deal with its legacy

Little has been invested in mining and exploration, and that includes in social compacts

- Ross Harvey

Mining is still central to the South African economy. It employs roughly 480 000 people directly. With an estimated dependency ratio of 10 to one, the industry essentially supports close to five million people. That’s a twelfth of the country's population.

Demand for minerals and metals is not slowing down. But our gold mining sector will close down at some stage — even current high gold prices cannot sustain going deeper because of safety risks and the associated expense. There will come a point where marginal cost exceeds marginal benefit.

Outside of gold, South Africa should be a global mining powerhouse. For the past 20 years, however, there has been very little exploration or production expansion investment.

In partnership with Mining Dialogues 360°, Good Governance Africa set out to explore what it would take to revive the mining industry and ensure that it becomes the catalyst for broad-based development. It became clear that the country needs a new vision for mining that will reconcile conflicting interests that seem to perpetually be at loggerheads with each other.

Any new vision needs to begin with the end in mind; what do we want mining to do for the country? We can all wax lyrical about that, but there’s an obstacle that must be dealt with first. Mining has an awful history in South Africa of imposing severe negative externalities onto both society and the environment. These are the divergences between private returns and social costs. In other words, companies mine and sell gold, reporting profits in the process, but they pollute rivers, create sinkholes, precipitate acid mine drainage, exploit labour and damage the social fabric of society in the process.

None of these ecological and social costs are recorded in company financial statements. This speaks to a broader global problem, but it’s particularly acute in mining, especially here at home.