The year of 2015 has been characterised by decline in commodity prices, labour instability and local cost pressures, PricewaterhouseCoopers (PwC) said in a report released in Johannesburg.
The net profit from the mining sector declined by 75
ercent to two billion rand (about 149 million U.S. dollars) despite a 26 billion rand (about 193 million dollars) reduction in impairment provisions, according to the report.
Andries Rossouw, the PwC Assurance Partner Financial Oerformance, said,”Financial performance for the South African mining industry in 2015 was extremely challenging and downcast.”
He also stated that the mining industry cash flow is the worst since the global financial crisis in 2008.
The mining sector only generated 12 billion rand (about 89 million dollars), indicating a four percent increase from last year. This year the operating expenses increased by 14 percent which is higher than the 13 percent of the previous financial year.
The audit firm also noted that labour costs still remain the biggest cost component even though the share of labour costs decreased marginally from 47 percent to 45 percent in the current year.
The PwC also said market capitalisation for the top 35 companies declined to 414 billion rand(about three billion dollars) as of June 30, 2015, compared to 675 billion rand (about 3.7 billion dollars) as of June 30 in 2014. These were affected by the continuing decline in iron ore, coal, platinum and gold prices.
The audit firm also said this is the worst decline in 10 years for the country’s main revenue generating minerals.
Rossouw said mining companies are struggling to pay for what they borrowed and distributions to shareholders. Some of the risks associated with mining in South Africa are uncertainty on the Mining Charter reporting outcome, water scarcity and productivity. Enditem
Source: Xinhua
