SOUTH Africa’s mining sector, criticised in the past for its human and environmental abuses, is proving to be a key support in the country’s economy which is weighed down by unattractive investment policies, corruption, and Covid-19 related lockdowns.
“Last year, we were concerned about the lack of space to support the economy amid the severe hit from the pandemic,” Elna Moolman, a South Africa economist at Standard Bank Group told Bloomberg News. “The recovery in commodities demand and their prices are providing very strong support to the economy.”
The mining industry’s output surged 18.1% in the first quarter compared to the previous three months, helping buoy growth more than forecast, the newswire said. The sector accounted for 9% of gross domestic product during the period.
Last year, the mining industry, which employs more than 451,000 people, accounted for 8.2% of GDP, according to the Minerals Council South Africa, an industry lobby group.
Bloomberg News said that revenue for the fiscal year through March exceeded budget estimates for the first time in five years as the industry drove an increase in corporate income tax collections, and led to the shortfall on the main budget coming in below forecast.
That had allowed the Treasury to reduce the amount of debt on sale at its weekly auctions for a second time since March and boded well for its plans to achieve a primary surplus in fiscal 2024-25 and stabilize debt at 88.9% of GDP the following year, the newswire said.