The rout in the commodities sector spells bad news for local jobs, writes Nicola Mawson.
Lonmin is the latest commodity player to say it could be cutting jobs, with as many as 6 000 on the line as it mulls closing or mothballing mines.
This comes as platinum drops to its lowest level since 2009.
Lonmin’s news follows on that from ArcelorMittal, which says it may cut 1 200 jobs as it considers whether to shut down its 102-year-old Vereeniging works.
ArcelorMittal and rival Evraz Highveld Steel and Vanadium are battling against cheap Chinese imports, which land locally at prices the local sector simply cannot compete with.
ArcelorMittal wants the government to step in and impose trade duties on the subsidised steel from the east, although this seems a bit too little, too late. I was writing about the Chinese threat to the steel market about 10 years ago when nuts and bolts were landing at prices below what local companies were paying for steel.
Now it’s all stops out to save the local steel sector. Just this week, Evraz became the first casualty of cheap Chinese imports when it said it was being forced to temporarily halt manufacturing, and would retrench 1 100 employees.
That company has also applied for protection from creditors.
The gold sector, which is in the midst of wage negotiations that are - as usual - dragging on with parties refusing to budge, is also battling.
Gold, usually seen as a safe haven when there are global ructions, is hovering around five-year lows.
I do feel for the miners, who have seen mine bosses take home millions in pay and drive flashy cars while those who do the hard and dangerous work barely eek out a living.
Pending doom?
However, the low gold price and higher wages will make a lot of local mines uneconomical, and we’ll see more closures and more jobs being lost. Even if mine bosses take a fat pay cut, there just isn’t enough money in mining anymore.
It’s been a long time since we were the world’s number one gold producer, and our platinum ranking is slipping too.
And now we’re losing our steel industry.
And commodity prices will continue to come off as demand from China falls as its economy slows.
Frankly, we’re on a slippery slope that has been a long time coming. Soon, we’ll have no real industry to speak of, and that bodes very badly for an economy that will battle to hit 2 percent growth this year.
We simply cannot continue relying on consumers to keep the economy afloat - more than 60 percent of our economy is driven by consumers.
We also cannot afford to import things that we should be able to make here because the weak rand is pushing our current account deficit higher and higher.
The government needs to step in and do something, and not just hold trade shows to showcase us to the world. We need industry protection, and we need the world to believe in us so we can attract more investment.
Sadly, I fear it’s already too late because the writing was on the wall a long time ago, but it was ignored.
I hope I’m wrong, I hope we won’t see more job losses; we can’t afford to push unemployment any higher than where it is because of the socio-economic impact.
I’m sure I don’t need to spell out what measures people resort to when they can’t feed their families.
Let’s fix this economy, and let’s fix it now.
* Nicola Mawson is the online editor of Business Report. Follow her on Twitter @NicolaMawson
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