The Time To Invest Is Now
South African companies in the quarrying industry should consider investing in the growth of their businesses right now, as the world and local economies drag themselves out of a prolonged slump and edge towards improved growth.
On the heels of the country’s fifth successfully run election, and a flood of positive data from leading economists, it makes sense to invest in an industry that ultimately supports all future building and construction projects, and supplies more than 80% of the raw materials required for structures and roads.
It is imperative that especially sand and aggregate mining operations are able to respond to increased future demands for construction materials.
Government and the private sector have backlogs in terms of investment in physical infrastructure. With the election out of the way, governmental heads have received a fresh mandate and will want to be seen to be delivering on their campaign promises. Likewise, businesses are seeing the first real ‘green shoots’ of a revival in world economies; and that translates into increased demand for South African exports and commodities.
Statistically, history shows that these macro indicators are followed by an up-tick in the residential building industry, and are followed shortly afterwards by the construction industry. This improvement is already in evidence and we are seeing vastly better sentiments in the residential sector already. With a new mandate, government can be expected to unleash some new infrastructure projects that should further stimulate the building and construction industry.
For this reason, we believe it is time for sand and aggregate producers to look to the future and put plans in place to deal with a higher growth scenario. Also, to look at the type and quality of minerals being produced and to actively market them to custodians of projects that are either in the pipeline or are being planned, such as municipalities, public works, construction firms and consulting engineers.
Stats don’t lie – local statistics show that residential, non-residential and total building projects show healthy growth and that year-to-date figures are supporting the fact that 2014 building figures will be up from last year – upholding predictions that the industry has reached a turning point. Furthermore, stability in the political arena should bode well for the future.
With the election over we can hopefully return to the real issues and work with government and the industry to move towards world-class mining practices in order to produce world-class aggregates and building products. We need to work together to create legislation that formalises the industry, introduces stricter standards and puts a stop to illegal mining and unnecessary borrow pits.
With a level playing-field, we will then be able to focus on the main issues facing the industry, like improving the quality and selection of aggregates to enable our construction industry to have access to world-leading products and enable new building methods. This will require investment in education and training of all levels of employees within our quarries, and will require assistance from government (SETA) to properly align the process of education and training.
Mining into the future – cooperation between quarrying and mining organisations, government, as well as interested and affected people – is currently reaping rewards for the industry, and is ensuring that the local economy remains buoyed-up with positive input from the mining sector – one of the most important contributors to our GDP.
Even despite labour unrest, changes to legislation, disagreement over allocation of new mining licences and other sticking points, the overall outlook for the industry remains positive. Cooperation between role-players shows that the path is clear for mining to take place and for investment to continue to be directed towards the mining sector.
Mining in South Africa remains a lucrative business for companies that are prepared to play by the rules.
With these improvements in place we are confident that the quarrying industry will be able to supply enough modern, good-quality building materials to the country’s construction and related industries. All that is required now is the will to change and the go ahead from government and the private sector to kick-start our building and construction industry.