Essay sample on the Contribution of Mining to South African Economy

In terms of GDP value, South Africa is estimated to have the fifth largest mining sector in the world valued at $2.5 trillion. South African government’s mineral resources are among the most valuable in the world, thus, there is no doubt that mining accounts for a significant percentage of the economy. According to the US Geological Survey, the country has got the largest reserves of manganese and platinum in the world. Besides, it also produces gold, diamonds, chromite ore, copper, coal, diamonds, iron ore, uranium and vanadium.

According to various surveys and analyses, the relative contribution of the mining industry to the South African gross domestic product (GDP) has taken a downward shift in the past ten to twenty years. This has been attributed to the growth of secondary and tertiary industries in South Africa. However, this is no cause for alarm since the mining sector is continuously adapting to the changing trends in the local and international conditions. The mining industry remains a cornerstone of the economy with significant contributions to job creation, economic activity and foreign exchange revenues.

In 2012, the mining industry in South Africa accounted for an estimated one third of the market capitalization of the Johannesburg Stock Exchange. According to reports from the Chamber of Mines in South Africa, mining accounts for about 18% GDP with an estimated foreign exchange of more than 50%. In 2012, the mining sector attracted significant foreign savings of about R1.9 that was at that time equivalent to 43% of the Johannesburg Stock Exchange.

Apart from just the above mentioned, there are other additional ways through which the mining industry contributes to the economy of South Africa. It should be noted that mining is also a source of feedstock for about 94% of South Africa’s electricity generating capacity. With this, the government is able to cut down on such costs and instead, use the funds in other developments that can foster economic growth.

Today, mining in South Africa contributes to an average of 20% of the country’s GDP, of which 50% is through direct contribution. Based on the recent trends in the market for minerals globally, the mining sector garners a total annual income of more than R330 billion. Besides, it is also among the major employers in the country. In fact, the mining industry is today estimated to employ more than one million people. This means that the sector does not only support the government but also concerned about the livelihood of the people, thus driving the economy forward.

Mining makes the largest contribution to the black economic empowerment in the South African economy. Being a key player in the economy of the nation, the mining industry boasts of a high level of technical and production expertise. South Africa has got world-class processing facilities to ensure that mineral resources production is kept at peak since that is the only way to maintain and enhance the economical gains from the mining sector. Two of the world’s largest mining companies have their roots in South Africa.

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