South African President Jacob Zuma said his government places a “high premium” on restoring stability in the mining industry, which plays a pivotal role in the continent’s largest economy.
There is a “need to support the mining sector and to ensure that there is a restoration of labor peace and order in the mining towns,” Zuma said in a speech to Parliament in Cape Town today. “Close to 60 percent of South African exports are mining-sector related. Mining companies also account for a large portion of the Johannesburg Stock Exchange capitalization and attract significant amounts of foreign inflows.”
Labor unrest that swept across the country’s mines last year and included the killing of 34 protesters by police at Lonmin Plc (LMI)’s Marikana platinum operation in August, has continued this year. The strikes shaved 0.5 percentage point off gross domestic product in 2012 and a further 0.3 percentage point this year, according to the National Treasury. GDP growth slowed to an annualized 0.9 percent in the first quarter, the slowest pace since a 2009 recession.
“If it was not for the mining strikes the economy could have created more than 57,000 jobs,” Zuma said. “While the mining sector has recorded some recovery in the first quarter of 2013, the sector is still performing below its potential.”
South Africa has the world’s biggest known reserves of platinum and chrome and also mines for gold, coal and diamonds.
Zuma dismissed allegations from opposition parties that he contributed to a 2.7 percent slump in the value of the rand on May 31 by failing to outline concrete measures to support the economy at a media conference.
“Markets were very volatile on the day,” he said. “Traders responded to news from the United States on quantitative easing. This led to the strengthening of the dollar. The rand’s weakness is a natural consequence of lower commodity prices and a surging dollar. Domestic events such as labor unrest would also have added to an already volatile situation. Markets were also surprised by the weak GDP figures.”
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