Zuma Says S. Africa Economy Too Weak Amid Mine Unrest
South African President Jacob Zuma said the recovery in the country’s economy is too weak and is hampered by tumbling commodity prices and a wave of labor unrest at the world’s biggest platinum mines.
The “recovery has not been as strong as needed,” Zuma told reporters today in Pretoria, the South African capital. “Without faster growth we cannot succeed in reducing unemployment, poverty and inequality.”
The continent’s biggest economy grew an annualized 0.9 percent in the first quarter, the slowest pace since a 2009 recession. A round of mining strikes this month has threatened a turnaround. Labor action last year reduced output and raised costs, prompting companies including Anglo American Platinum Ltd. (AMS), the world’s largest producer of the metal, to consider cutting back operations and fire workers.
The problems faced by the mining industry, which contributes 60 percent of South Africa’s export revenue and provides about one million jobs directly and indirectly, has affected the rest of the economy, Zuma said.
“When our mining sector is in difficulties, this affects the wider economy, leading to industrial slowdown,” Zuma said.
South Africa is the world’s top producer of platinum, the price of which has declined 13 percent since the start of February, while gold, another major export, has slumped 22 percent since Oct. 4, when its price was the highest since November 2011.
Mining strikes have often turned violent and deadly, spurred by rivalry between the National Union of Mineworkers, an ally of Zuma’s ruling African National Congress, and the Association of Mineworkers and Construction Union. The latter has won over thousands of disgruntled NUM members, eroding what used to be South Africa’s biggest labor union.
The ANC is in an alliance with the Congress of South African Trade Unions, of which the NUM is an affiliate.
“The fact that Cosatu is in alliance with ANC has never made us fail to deal with things,” Zuma said.
Zuma said he’d tasked Deputy President Kgalema Motlanthe, a former general secretary of the NUM, as well as the finance, mineral resources and labor ministers to mediate in the conflict between the unions.
“I don’t think the government have taken a stance that takes sides when it comes to how we relate to miners or labor organizations in mines,” Zuma said. “We are very neutral.”
The rand slipped 1.2 percent to 9.9483 against the dollar at 1:23 p.m., the weakest level since March 2009. The currency has declined 15 percent against the dollar this year, making it the worst performer of 16 major currencies tracked by Bloomberg.
“It seems increasingly evident that we will basically see no policy changes to either boost growth or deal with the situation in the mining sector,” Peter Attard Montalto, a London-based economist at Nomura Plc, said in e-mailed comments. “Markets seem rightly unmoved by Zuma’s attempts to reassure them.”