A slowing global economy presents another major headwind for the industry, which accounts for 8.8 percent of South Africa's gross domestic product and employs 500 000 people.

At best, 2012 will provide clarity on the ANC's stance on nationalisation, an issue that has raised investor concerns and hampered investment in the sector.

With the party scheduled to hold its policy and elective conferences this year, there are expectations that it will make an official pronouncement on the issue.

Chamber of Mines chief executive Bheki Sibiya said the nationalisation debate had hindered investments in South African mines.

"We are looking forward to the finalisation of the nationalisation debate. We took heart when President (Jacob) Zuma said that nationalisation is not a policy of government.

Nationalisation has delayed investment, and opportunities for investments may be reopened only in 2013 after the ANC has made an official pronouncement in December," he said.

The call for nationalisation of mines by Julius Malema, the suspended firebrand president of the ANC Youth League, is fuelled by the belief that only with state intervention will South Africa be able to cure rising inequality, unemployment and poverty.

In November last year Malema was suspended for five years for sowing divisions in the ANC's ranks and for disrespecting party elders.

In October he led a march by thousands of ANC Youth League members through Johannesburg and to Pretoria, calling for economic freedom "in our lifetime".

Last year the local mining sector was disrupted by strike action and safety stoppages due to fatalities. There were 116 fatalities in the sector by November last year, compared with 128 in 2010 and 168 in 2009. And, according to the Department of Mineral Resources, the number of cases of occupational diseases remained a concern, although cases of silicosis fell to 1 742 in 2010 from 4 468 in 2009.

Following the strikes, employers in the gold sector agreed to lift wages by between 7.5 percent and 9 percent, depending on the type of worker, and entry level wages were raised by 10 percent.

Coal companies last year reached a two-year deal in which they agreed to increases of 8 percent to 10.5 percent in the first year and 7.5 percent to 10 percent in the second year. Exports of coal to India were down last year because of lower prices in Indonesia. India accounts for 25 percent of South Africa's coal exports.

Because of the euro debt crisis, experts expect demand for commodities to soften in Europe and remain flat in Japan and North America.

Johnson Matthey Platinum Review forecast that growth in supplies of platinum would not come from South Africa, due to strike action and stoppages caused by accidents.

National Union of Mineworkers spokesman Lesiba Seshoka said: "Our concern is whether the mining industry will create jobs. Also, South Africa's mining industry is in decline, particularly gold, diamonds and copper. However, when looking at platinum, we have top platinum producers. That's where there will be development."

Sibiya reflected that 2011 was a year with mixed fortunes because prices of platinum, gold, coal and steel performed well. But the booming price of gold, which reached a record high of $1 900 (R15 440 at current rates) an ounce, did not translate into more jobs.

"The boom in the gold price was short lived in terms of long-term jobs. There was a delay in employment, to say let it (the booming gold price) become a trend," he said.

And the European debt crisis will clearly have an impact on the demand for mineral resources in euro zone countries.

Percy Takunda, a commodity analyst with Imara SP Reid, said there was hope for the mining sector in the new year.

"South African mining is not necessarily in decline. During the last quarter South African gold mining companies did very well, with a number declaring dividends," Takunda said.

Gold Fields paid a final dividend to June of 70c a share, at AngloGold Ashanti the third-quarter dividend for 2011 was 90c, and Harmony made a dividend payment of 60c a share for the year to June 2011.

Statistics SA said South African mining production fell by a significant 12.7 percent year on year in October after a revised 3.9 percent decrease in September last year.

"We are hoping that the commodity boom is sustained, and grows to enable the mining sector to create between 160 000 and 200 000 jobs by 2020," Sibiya said.

He added that water licences were not granted timeously and comprehensively. He also said the problem of acid mine drainage had to be resolved this year.

"We believe that if a regulatory framework is provided, acid mine drainage can be resolved. If the problem is not resolved, especially for Johannesburg in 2012, we will have a big problem on our hands," Sibiya said.

Dineo Matomela

Independent Newspapers