PRETORIA (miningweekly.com) – South Africa has lost an estimated R10.1-billion to strikes and stoppages in the platinum- and gold-mining sectors since the beginning of the year, Finance Minister Pravin Gordhan’s Medium-Term Budget Policy Statement (MTBPS) revealed on Thursday.

The National Treasury said South Africa’s declining mining output and the spread of strike activity also depressed activity in related industries, such as manufacturing, logistics and services.

Gordhan told journalists ahead of his speech to Parliament that disruptions in domestic production, particularly mine output, contributed to the lowering of South Africa’s 2012/13 economic growth projections to 2.5%.

The MTBPS indicated a sharp decline in platinum-group metals (PGMs) output resulted in a 6.3% decline in real value added in mining in the first half of 2012, compared with the previous corresponding period. The platinum price had fallen by 14.2% to $1 427/oz between February and July, but rebounded above $1 650/oz in September, as strikes limited supply.

In the year to August, mining output fell by 3.3%, with production of PGMs 15.3% lower. However, Chinese demand spurred continued strong growth in iron-ore, offsetting some of the decline in platinum, gold and coal.

The purchasing managers’ index suggested that manufacturing output in the metals subsector would remain muted in 2012.

In answering a question posed by Mining Weekly Online, the Minister said he was pleased with the National Union of Mineworkers’ announcement on Wednesday that only about 30 000 out of the 70 000 striking mineworkers were still engaging in industrial action.

“We need to make adjustments to improve the living conditions of mine workers, as well as wage negotiations. Business, labour and government will need to work together to improve the circumstances and South Africa’s mining sector and the country as a whole.”

Gordhan said the labour relations crisis in the mining sector was a cause for “urgent reflection”.

“There are lessons to be learnt, mistakes to be acknowledged and corrective steps to be taken by all constituencies. Above all, its time for action. Collective action,” he told lawmakers in Parliament.

Government would target progress in several areas, including improving living conditions for miners and upgrading informal settlements, to improve confidence in the economy, expand trade and investment, increase employment and broaden participation in the economic recovery.

The MTBPS prioritised informal settlement upgrading in several areas, including mining communities around Rustenburg and in the municipalities of Lephalale, eMalahleni, Govan Mbeki and Steve Tshwete.

“We assure our people that we will repair dysfunctional municipalities, we will try harder to connect book suppliers to schools and we will work with business and labour to create decent living conditions in mining communities,” Gordhan stated.

He added that government would work to restore confidence in labour market institutions and take steps to combat violence and lawlessness.

Relatively weaker currency, greater export potential into other Southern African Development Community countries and government support through incentives and local procurement targets were also expected to assist in increasing production of metals products over time.

The National Treasury marginally revised South Africa’s tax revenue downwards by R5-billion to a consolidated revenue estimate of R901-billion, owing to slower-than-expected growth, while also warning that further downward revision may be warranted should economic conditions deteriorate or mining sector output be disrupted over an extended period.

However, the revised revenue target still marked a nominal growth rate of 10.6% over the previous year.

Consolidated revenue for the 2012/13 year was 7.6% higher than the previous year, and was expected to reach R986-billion in the next financial year.

Meanwhile, disruptions to mining output have exacerbated the pressure on South Africa’s exports with volumes contracting at a rate of 6.3% a year in the second quarter after falling by 1.5% in the first quarter of 2012.

While the value of coal and chemical products exports remained robust, platinum and base metals declined over the first eight months of the year by 21.9% and 6.7%, respectively.

Export growth was expected to improve over the medium term, provided that mining production stabilised, external demand strengthened and trade with emerging and African economies became a larger share of total exports.