[miningmx.com] – FINANCE minister, Pravin Gordhan, said the spate of strikes, especially in South Africa’s mining sector, had hurt the credibility of the country, and were the root cause of two credit downgrades.
In a report by Bloomberg News, Gordhan was quoted to have said the strikes “… have damaged the credibility of South Africa. It has created doubt in a certain class of investors.’
Giving a speech in Johannesburg, Gordhan was quoted to have said that the government and businesses were addressing the concerns of the ratings companies as well as the causes of the strikes in the mining industry.
Gordhan said the South African economy was growing this year at the slowest pace since 2009 and that strike action had cost more than R10bn in lost mine output, and would probably trim economic growth 0.5 of a percentage point.
The rand has weakened 7.8% since a credit downgrade by Moody’s Investors Service on September 27. Standard & Poor’s lowered its rating of South Africa a notch to BBB in line with Mexico, Russia and Brazil, Bloomberg News said.
The latest credit downgrade was applied by Gold Fields to BB+/B, effectively junk status or below investment grade. The gold producer, as well as its rival, AngloGold Ashanti had been given a negative outlook.
Speaking to BDLive, Sven Lunsche, spokesperson for Gold Fields said: “We expected this because we had been placed on ratings watch negative. When the country was downgraded we knew we were going to follow.”
The gold producer was not immediately concerned about the credit downgrade. Although it would make money more expensive to raise, Gold Fields was not considering venturing into the debt markets.
