CAPE TOWN - The minerals council of South Africa has said it believes that mining could be critical and effective in helping to boost economic recovery after the country emerges from the Covid-19 crisis.
According to the council, South Africa would be required to pass a set of constructive economic reforms to improve its financial performance and productivity.
“These measures are also going to be critical for achieving previously set targets to reduce poverty and unemployment. Unfortunately, the only way South Africa can return to a reasonable investment grade will be through significant economic restructuring, especially since Moody’s has now lowered South Africa’s credit rating,” the council said in a statement.
“Earlier this year, the country’s economic growth forecast was similarly greatly reduced, boosting the need for sizeable economic restructuring.”
South Africa is currently under a five-week lockdown, which is due to be lifted at the end of April. The lockdown, which has brought economic activity to a halt, was imposed by government to curb the spread of the coronavirus.
The collaborative efforts of the department of mineral resources and energy, and the minerals council, had shown that the country was putting the health of employees first, said the statement.
The efforts were also testament to the department and council's commitment to delivering essential services and minimising the damage to the operational capacity of the sector, according to the statement.
Industry experts have said they believe that the lockdown could have a positive effect on metal prices in the longer term. It is forecast that platinum will benefit most from the current situation, a boon for South Africa, which last year contributed close to 75% of global output.
The lockdown will particularly benefit those producers who are able to keep a sizeable proportion of operations functional due to heavily automated processes and successful implementation of new technologies.
Iron ore could similarly benefit from the current situation, the council said, given that South Africa is one of the largest producers, whilst Chinese demand is slowly recovering as the country is exiting its Covid-19 crisis phase.
“Furthermore, the interest in bulk commodities has remained relatively high despite global quarantine measures being rolled out across some of the world’s largest economies,” the council said.