What did 2022 mean for the mining industry?
2022 proved to be an interesting year for the mining sector. According to an S&P report, total market capitalisation decreased from R1,470 billion to R1,303 billion – which translates to an 11% (R166 million) year-on-year decrease from 2021. This is mainly attributable to a decrease in market capitalisation of companies within the iron ore and platinum group metals (PGM) sectors. PGM and gold accounted for 73% of the market capitalisation from 76% in 2021.
Market Capitalisation per commodity
The report points out that fears of a recession and the ongoing COVID-19 lockdowns in China during the second half to June 2022 resulted in a decrease in iron ore prices. PGM prices were also under pressure due to production recovery and semiconductor shortages, which placed pressure on the supply of vehicles. The lower prices resulted in a significant decrease in market capitalisation for the larger PGM producers.
Energy prices, including the price for export coal, reached record highs on the back of supply constraints and the effect of the war in Ukraine. This trend continued after June 2022.
Despite this, the SA mining sector delivered a sterling performance with financial performance exceeding expectations on most fronts. Distributions to shareholders more than doubled to R190 billion, capital expenditure grew by 36% and taxes paid increased by 14% as South African mining companies in aggregate maintained profitability at last year’s high levels. Growing demand for commodities in the sector saw record rand prices for the PGM basket, iron ore, and coal, while most other South African commodity prices remained at relatively high rand levels.
Supply chain constraints
Across Africa, lockdowns due to COVID-19 hampered operations and put pressure on demand for key commodities. This, in turn, disrupted global supply chains. While vaccination programmes gained traction, they did not prove the absolute protection that many hoped for. This curtailed operations at mines – particularly those who experienced outbreaks of the COVID-19 Omicron variant in the workforce.
An added complication was that some important supplies – particularly mineral and metal deposits needed for low-carbon technologies – are generally concentrated in specific regions like South Africa, the Democratic Republic of Congo, and Chile. This can result in supply bottlenecks should investments in production capacity not meet demand, or if there are disruptions and breakdowns in their institutions, regulations, or policies. Changes in mining codes specifically higher royalties and taxes to plug budget deficits caused by COVID-19 can also impact supply chains.
Increased demand for a number of commodities in the medium to long term is a result of a global low-carbon energy agenda, which is a key focus. Global constraints in the supply of these commodities will mean increased prices and a need for investment in supply. Staying ahead of these investment opportunities is critical to the success of the continent. Africa Mining IQ (AMIQ) offers mining intelligence to help guide mining project investors and suppliers.
Mining intelligence
Africa Mining IQ (AMIQ) offers detailed mining intelligence on over 2 000 African mining projects and mines across various stages of development.
AMIQ is an information service that helps you grow your business by giving you African mining project insights, key contact details, and the African mining industry intelligence you need to expand your business.
- Get in-depth detailed information on over 2 000 African mining projects and mines – regularly updated by a dedicated team of full-time research mining specialists
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- Your dashboard is tailored to your sales pipeline, African mining interests, and targeted African mining projects and mines
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- An interactive assisted service helps you unpack our extensive African mining information platform
- Get verified personal contact details for close to 10 000 African key mining contacts
Why you need Africa Mining IQ to grow your business in the African mining sector
- Your tailored guide to grow your business. We show you where to target your efforts with researched, strategic and analytical information, which is filtered by African mining project, region, mineral, mine life cycle, mine owner, consultant, etc.
- Be the first to get the latest information. This is achieved by tracking African mining projects and mines through their lifecycles – from exploration to mine closure.
- Intelligence that helps you overcome tender barriers. Our notifications prompt you to act at the most opportune time, even in a closed tender environment. We monitor mining project and mine updates so that you get comprehensive key contact information enabling your brand to get specified in design and costing stages.
- Contact the correct person at the appropriate time with guaranteed contact information for worldwide mine owners, mining project consultants, engineers, and EPC companies. We remove contact barriers with the direct phone and personal email contact details – per operation.
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