SUMMER 2012

Economic overview - the Impact

of mining strikes on the economy
Although mining as a whole makes up about 5% of South Africas overall GDP, it makes up approximately
50% of the countrys total exports, a third of these are platinum. Therefore a drop in output results in a
drop in the countrys export performance.
The mining strikes affected directly the overall platinum production, and mining contributing the largest
share of provincial GVA in the North West province, it most certainly will have a negative impact on the
provincial economy over all.
According to Global Insight, the 41 day strike at Lonmins Marikana mine alone resulted in production loss
of about 186 000 ounces of PGM, which is approximately 15% of the mines 2011 annual output. Thus,
the total estimated loss in production from this particular strike will be between 1.1 and 1.5% of total
PGM output in South Africa.
The loss will be even more as the Marikana strike had a mothball effect on other PGM miners in the
region thus interrupting their production negatively as well.
What does this mean for the North West?
The loss in output to the Rustenburg and Madibeng (Brits) economies will be higher as their economies
are strongly influenced by platinum mining.
Rustenburgs loss will range between 0.9% and 1.3% of the 2011 output, whereas Madibeng will
experience and even greater loss in PGM production (between 5.5% and 8.1%) of 2011 output.
The impact of the mining strikes in the Bojanala region will not have immediate catastrophic results for
the economy of Rustenburg; as it is one of the largest city economies in South Africa and thus can handle
a few years of negative platinum output. However, in the long run, because of an undiversified economy
in the region the result could be similar to that of the Welkom and western Gauteng areas after the gold
mining output declined. Madibeng on the other hand has a more diversified economy than Rustenburg,
but 80% of its PGM production is reliant on Lonmins operations and its economy is much smaller than
that of Rustenburg.
Table: Gross Value Add by Region (GVA-R), Broad Economic Sectors, Sector Share of Regional Sector
2011(Source: IHS Global Insight Regional eXplorer version 646)


Graph: Comparison of economic sectors in the Madibeng region (Source: IHS Global Insight Regional eXplorer
version 646)

For more info contact Hantie Hoogkamer
General Manager : Trade and Investment Planning
+27 14 594 2570