FOREWORD - JSE MAGAZINE

FOREWORD

South Africa is a country built on mining, and as such the JSE is also intrinsically linked to the extraction of minerals

FOREWORD

It was during the pioneering gold rush that our stock exchange was founded in 1887, trading from its first base in a mining tent in what would become known as Johannesburg or Egoli – the city of gold.

The continent’s first mining companies brought the JSE into existence, as they wanted to float and trade their shares, and raise capital for their mining operations. Therefore it’s no coincidence that even today, the oldest company remaining listed on the JSE is a mining company – DRDGold, whose listing dates back to just after the JSE was founded.

Ever since those early days, mining companies have played an influential role in SA’s economy, politics and all levels of society. They create jobs and secure livelihoods in parts of the country where there is not much other economic activity. In Limpopo, Mpumalanga, North West and the Northern Cape, mining contributes more than 20% to the provincial economy. The multiplier effect of mining is significant: each of the 452 866 people employed in the industry is responsible for up to nine indirect dependants.

Mining companies are instrumental in driving economic growth, social development, foreign investment and fiscal stability – and have been doing so with great resilience, even during cyclical periods of low earnings and recession. Most recently, the COVID-19 crisis reminded us of this leadership role, when mining companies were among the first corporates to implement a large-scale, strategic response to the pandemic, addressing basic human needs such as clean water, healthcare facilities and food relief. The sector historically accounts for the largest portion of SA’s CSI expenditure. In 2021, this amounted to an impressive 33% of the total R10.3 billion CSI spend in the country.

After two disruptive and difficult years, SA mining is currently benefiting from the global surge in commodity prices. According to Stats SA, mining recorded the highest growth rate (11.8%) of all industries in Q4 2021 compared to 2020 – outperforming agriculture (8.3%) and manufac-turing (6.6%). In financial terms, this is equally impressive, with mining contributing R27.2 billion in taxes and R371.9 billion to the national GDP in 2020.

At the JSE, mining companies are also among the top performers, not only in terms of market cap and share price but, increasingly, also regarding their non-financial performance. Faced with growing scrutiny and stakeholder activism, companies in the extractive industries often go beyond legal compliance in their social and labour plans and ESG strategies to obtain their social licence to operate. The worldwide focus on responsible mining also means that mining companies have to tread carefully in terms of environmental impact and human rights, improving their workforce and community engagement while paying close attention to their corporate-governance structures, carbon and water disclosure, and other fundamental elements of sustainability.

SA’s mining companies also play a vital part in the transition to a low-carbon economy – they have 3.9 GW of renewable solar, wind and battery energy projects – worth a combined R60 billion – in the pipeline. The Minerals Council South Africa has asked the government to support its members in implementing these projects by addressing problems that range from electricity interruptions and inadequate rail availability to regulatory uncertainty and red tape.

Tackling these challenges is also important if we want to take full advantage of the current commodities boom and the increasing demand for minerals. SA holds 80% of the world’s reserves of platinum group metals, which offer opportunities for green-hydrogen development, while our resources of chrome, vanadium, titanium and lesser-known metals hold promise for their use in renewable-energy installations, electric vehicles and batteries.

If the past has taught us anything, it’s the importance of mining for SA and its ongoing relevance for our future.

Valdene Reddy
Head: Capital Markets