The entry-level renumeration has been rising more than the average annual change in CPI since 1994
10 November 2021 - 15:17Despite the disruptions caused by the Covid-19 pandemic, the global mining industry has been experiencing something of a bull market, and most SA miners have benefited from higher commodity prices and are enjoying good returns on investment. This has flowed through as increased taxes and royalties to the SA fiscus during a time of severe need.
These are the short-term trends that reflect the volatility of commodity prices and the currency markets. More important for the gold sector are the longer-term trends, in which it is difficult to contemplate any changes in direction given the realities of the country’s mature mines and ore bodies, which have now been mined for 135 years.
Employment has similarly declined, though at a markedly slower rate than production, meaning gold production per employee has declined noticeably over the years. Despite this productivity decline, wages have continued to increase significantly, with the entry-level wage rising annually at a real rate of between 2.5 and six percentage points more than the average annual change in the SA consumer price index of 6% since 1994.
This, combined with the exponential increase in the cost of electricity — up 560% in nominal terms since 2008 — and exacerbated by supply disruptions for more than a decade, electrical power now represents 25% of operating costs , more than any other part of the mining sector. The impact on long-term investment in the SA gold mining industry due to heightened uncertainty caused in part by these factors cannot be overemphasised.
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