China’s Post-COVID-19 Economic Recovery Is A Boom For South Africa’s Mining Sector

mining equipment at work africans on china
Credit: Dominik Vanyi

China’s economic recovery post-Covid-19 can be an opportunity for South Africa’s economic recovery. This is particularly in the area of South Africa meeting the high demand for minerals for China’s crude steel production. 

African Rainbow Minerals ferrous division CE Andre Joubert is reported by MiningWeekly to have said that China’s crude steel production grew by 3.7% year-on-year from January through to August, whereas steel production in Europe and North America declined by almost 19% over the same period. China’s Covid-19 stimulus package was different from other countries in the sense that, Beijing “focused on construction, an industry in which crude steel is widely used.”

In order words, according to Andre Joubert, despite the Covid-19-induced hard lockdown, Chinese crude steel production will hit the one-billion-tonne mark this year, accounting for most of the current global demand. Therefore, Since South Africa exports most of its iron-ore it produces to China, Joubert believes the former is well-positioned to benefit. 

“With China being the largest user of iron-ore globally, South Africa further benefits from supplying the country, particularly as output in Brazil has yet to recover fully from tailings dam disasters,” MiningWeekly expressed. The current supply shortage has therefore encouraged the iron-ore price to escalate to over $100/t, boding well for the South African market that lost about R7.5-billion (or 4.7-million tonnes) during the local lockdown restrictions. Iron-ore prices are currently averaging at over $120/t for iron-ore. Manganese demand is equally expected to increase from early 2021, and South Africa stands to benefit as well. 

Trade & Industrial Policy Strategies (TIPS), research instituted has found that “while South Africa had seen on an overall decline in exports during the lockdown, exports to China had grown by just more than 2% year-on-year during the second quarter,” Engineering News reported.  Ores, iron and steel, wood pulp, copper, and fruit and nuts, all together accounted for 88% of South Africa’s total exports to China by value in the second quarter. 

What options should African countries consider to put their economies back on track post-Covid-19? And how can China be relevant in that regard?

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