Institutional impediments to growth in the mining sector in South Africa

Abstract

The South African mining sector, once the bedrock of the economy, has been in decline this century while other countries have experienced growth in this sector. The mining sector in South Africa makes a significant contribution to the South African economy through direct and indirect jobs, taxes, royalties, skills development and foreign exchange revenue. The decline of this sector is concerning given its potential for employment, taxes and foreign exchange in a South Africa in great need of all three. Gold, PGMs1, coal and iron-­‐ore account for about 81% of South Africa’s mining output. The price, demand and production of these four commodities in the 21st century will be established as a benchmark and South Africa’s production will be tested against this. Mixed method research using secondary quantitative data and a qualitative survey will be utilised to test the hypotheses. Quantitative secondary data is used to establish price and production trends. A qualitative survey conducted with key stakeholders in the mining sector identifies opinions and reasons for the South African mining trends. This study confirms the important role of institutions in creating certainty and encouraging investment.