How South Africa became a mining country again
Resources have tripled their weighting on the JSE over the past decade, and four miners have muscled their way into the Top 10 most valuable companies.
South Africa's mining sector has experienced a resurgence after years of decline. This resurgence has been accompanied by some violent reversals in the market. Mining shares were hit on Monday, with Harmony falling 5.6%, Implats 3.7% and Valterra 3.1%. The JSE All Share index (Alsi) lost 1.4%, highlighting the volatility in the precious metals trade.
Despite this, resources now account for more than 30% of the JSE Alsi, up from just 10% in 2015. This significant increase is primarily due to rising commodity prices, particularly for gold and platinum group metals (PGMs), which now make up four of the top 10 companies on the JSE. Gold Fields, the largest company by market cap at $43 billion, has seen its value more than triple from $14 billion a decade ago.
Other companies, such as Naspers and Impala Platinum, have also benefited from the PGM price recovery. The JSE was once dominated by mining, but its dominance has waned as the economy diversified into banking, industrial and consumer sectors. Mining's decline accelerated as SA's deep-level gold mines became more expensive to operate, and as the country expanded mining operations offshore following the lifting of international sanctions in the 1990s.
By 2015, resources had fallen to less than 10% of the Alsi. The top 10 companies on the JSE have undergone a dramatic transformation, with banks and tech/comms companies now dominating. Allan Gray's data shows mining companies' weighting in the Alsi has increased by 1,300% over the past decade. While precious metals prices have soared, the SA gold mining sector remains in structural decline, with gold output declining by an average of 5.8% per year since 1994.
Written by urgent.news from The Citizen's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
