PROFITS from South African mining companies halved in the 12 months ended September to R108bn, according to a report by News24.
Citing a report by auditing firm PwC on Tuesday, the publication said a combination of lower commodity prices, inflation and infrastructural logjams were responsible for the decline. The aggregate industry profit totalled R206bn in PwC’s 2021/2022 report.
For its reporting purposes, PwC excludes companies with a market capitalisation of less than R200m as well as companies that delisted from the JSE. Its report covers all full year results registered this year up to September 30.
Transnet Freight Rail’s deteriorating performance, especially on the critical export coal line, has been a key challenge, said News24 citing the report. Load shedding has hit production, although to a limited extent, it added.
Andries Rossouw, PwC’s Africa energy, utilities and resources leader, said in a statement on Tuesday that a weaker rand may have provided some relief, but this has been offset against more expensive imports, and higher prices for inputs such as chemicals and equipment.
PwC noted the sector’s regression comes after two years of record performance and shareholder returns, and R108bn still compares favourably to the R32bn recorded in 2019 or the R11bn loss in 2018.
As concerns mount that South Africa is facing a fiscal crisis, the mining sector’s downturn will be felt by the government, which benefitted from windfall taxes and royalties from the industry in the previous two years, said News24. The sector’s reported tax expense dropped to R48 billion, a 34% decline.
