The Decline Of South Africa Economy: Mining Sector

Never have the calls for the growth of South Africa Economy been so urgent as today. It is undoubtedly the most discussed subject in the country. Why has the economy slowed down of late after several years of growth and why has the mining sector declined  as well.

Recognized for creating prosperity, jobs, and increased incomes, industrialization is the mainframe of South Africa Economy. The manufacturing sector’s contribution to GDP growth actually declined from 12% in 1980 to 11% in 2013, and has since stagnated, according to the United Nations Economic Commission for Africa (UNECA).


The decline over the years

South Africa owes much of its wealth to the mines but the sector decreased with a vengeance and a challenge to the government of President Cyril Ramaphosa who must fight record unemployment in an election year.


Fortunately, at a meeting organized by the world mining association in indaba, several companies, investors, unions and political leaders, are focusing on finding new fields and creating jobs. At their peak in the 80s, South African mines employed 760,000 people and contributed 21% of the country’s gross domestic product (GDP). Today, they have only 450,000 employees and barely 7% of the national wealth.

This massive decline is responsible for overall decline of the economy and has seen the economic growth stagnate after a decade of steady growth. The South Africa economy which is said to be one of the best in Africa has lost its Midas touch due to the following factors.

Extinction of mining towns

The mining industry boomed in the ’80s. Lately, the industry is in a state of anarchy as majority of the mining towns are slowly starting to go into extinction. There are several mines abandoned and several political struggles stripping most industries of their mining properties.


That’s not all, ¬†Environmental degradation in some areas means mining activities are threatening to pollute the soil and water which is a threat to the health of the communities nearby. Hence, more mines are abandoned.

Increased Mining Cost

Commodities such as iron ore, coal, and manganese are performing fairly well in the labor market. However, high-cost materials such as gold aren’t performing that well despite several low-cost initiatives. To this effect, the production of gold has declined which means the price has increased as well.

Due to increased mining cost, gold production has decreased over the last decades with statistics showing close to 15% decline in production at the turn of each year. Hence, the gold sector has recorded low investment return..

Workers Unrest

There have been issues of mine workers soliciting for higher incomes which have seen several striking actions from the union. Unfortunately, most of these protests have resulted in dire consequences such as the one recorded in 2012 which claimed 34 lives. According to reports, the striking workers were asking for a raise which brought the attention of the government to the plight of mine workers.


The problem of the Economy isn’t limited to the mining sector alone but spreads across all sectors of the economy. Hence, the government must take a stand to make the right decisions and save the economy from heading to recession.