Gloom hangs over African mining as China growth slows
Cape Town (AFP) - An air of gloom hung over Africa's biggest annual mining conference this week as corporate giants and governments wrestled with boom times gone bust in the wake of China's downturn.
Politicians urged mining firms to limit job losses in economies already facing shrinking tax revenues from their mineral wealth, while struggling miners called on governments to provide investment and stability.
Phrases like "tough times" and "extraordinary circumstances" littered speeches and panel discussions at an unusually subdued Mining Indaba in Cape Town, which has drawn some 6,000 delegates.
"If we don't adapt, we perish," said Mark Cutifani, chief executive of Anglo American, which has announced plans to cut its portfolio of 55 mines by nearly half and shed some 85,000 jobs.
But like other CEOs and politicians, Cutifani also looked for silver linings in the clouds that have seen commodity prices drop across the board as growth slows in China, the world's biggest market.
"China is moving from its infrastructure-fuelled growth to a consumer-led economy. It will be a bumpy ride but it is a supertanker that is not going to stop despite its slowdown," he said.
"Things may still get worse before they get better.
"We can't rely on a reversal of this price slump any time soon. For many of us in the industry, 2016 is already shaping up to be the most challenging year yet."
On a continent where mining is a mainstay of many national economies, it is not only the miners who are facing this year with dread.
"We are asking mining companies to reinvest during this difficult period," South Africa's Minister of Mineral Resources Mosebenzi Zwane told AFP on the sidelines of the conference.
He urged firms to work with the government in a country rich in natural resources to minimise the impact of job losses, which could run into the tens of thousands.
"Let's not take advantage of the situation to make people worse off," Zwane said.
- Long-term outlook -
Unemployment in South Africa already stands at more than 25 percent, with the number rising to nearly 35 percent when those who have given up looking for work are included.
Zwane also suggested that mining companies had not taken advantage of the commodities boom to prepare for the bad times.
But critics say strikes, interrupted power supplies, a mining code in limbo and disputes over compulsory black shareholdings have hurt investor confidence in the country.
Governments and investors throughout Africa have struggled for years over the distribution of the mineral wealth buried under much of the continent, which remains the poorest in the world.
The debate about how its raw materials should be exploited -- and for whose benefit -- has gained renewed fervour with the fall in commodity prices.
Rio Tinto chief executive for diamonds and minerals, Alan Davies, said that despite the tough economic conditions he remains "convinced that the extractive industry in Africa can serve as a powerful catalyst for broad-based economic transformation and long-term growth."
But, he told the conference, this needed partnerships between companies and governments, investment certainty and infrastructure development.
While China's downturn, along with an oversupply of minerals, is widely blamed for the crash in commodity prices, some still see its interest and investment in Africa as positive.
"With China coming in on the mineral and other sectors, this will change the kind of opportunities that are available to African governments and African businessmen," said Sheila Khama, director of the Africa Natural Resources Center at the African Development Bank.
"You now have an additional player to traditional investors from the United States and Europe. I think this is good for Africa," she told AFP.