This company is a constituent of the mining sector. The mining sector depends heavily on global commodities prices, especially those paid for base and precious metals. These days this has a lot to do with the demand for base metals in emerging markets like China. It’s not just the prices of metals and minerals but also the oil price that has had a huge impact on the mining sector. Transport costs can go through the roof when the oil price is high. Machinery also needs to be powered, and when fuels go up in price so do the production costs.
Even during economic downturns, when tumbling demand for natural resources usually leads to lower commodity prices, there are a few bright spots. Gold, silver and diamonds may be used as safe haven investments, and their miners can consequently become quite profitable.
New technology and machinery have made mining more cost effective and allowed miners to explore areas which used to be inaccessible. There is also less wastage as manufacturers are keen to get the most out of all the natural resources they buy. Manufacturers also use recycling to get the most out of the natural resources they have acquired.
Miners continue to face community and environmental challenges. In new mining areas, houses and infrastructure often have to be moved. Once a mining site is closed, the landscape tends to look very different from before, requiring re-naturalisation programmes and re-settlements. It is now the responsibility of the mining companies to ensure pollution of the area is kept to a minimum. In terms of health and safety, new requirements and safety equipment have made the job less dangerous for miners.
Watch this space: South Africa is one of the world’s top mining countries. Its miners produce large quantities of platinum, chromium, manganese, gold, titanium and diamonds and it doesn’t stop there. The variety of South Africa’s metals and minerals is second to none. Much of its historic wealth has been generated from mineral exports.
