BENEFITS OF MINNING

The mining “sector accounts for roughly one third of the market capitalization of the JSE, and continues to act as a magnet for foreign investment in the country.”

(South Africa.info- 13.04.12). South Africa uses percentage of its coal harvesting to supply energy and electricity generation. As well as this the coal is used for petrochemical industries such as Sasol, for metallurgical industries such as Iscor and for domestic personal usage.

 Eskom is one of the world largest electricity producers. The electricity is generated through coal fire stations, which are located near most coal suppliers. Government owned Eskom dominates the South African power industry and the National Energy Regulator of South Africa regulates their prices. The power stations use unconventional pulverized coal technology with below average thermal efficiencies. In the past Eskom has relied on long-term contracts. However over time coal quality has been decreasing and most of these contracts have been exporting the higher-ranking coal leaving South Africa with poor quality. Which in tern has affected the production process as Eskom has found itself buying from smaller companies at smaller amounts. Therefore this also affected electricity prices.

In 2009, according to the Chamber of Mines of South Africa, the industry contributed:

•                8.8% directly, and another 10% indirectly, to the country's gross domestic product (GDP).

•                Over 50% of merchandise exports, if secondary beneficiated mineral exports are counted.

•                About 1-million jobs (500 000 directly).

•                About 18% of gross investment (10% directly).

•                Approximately 30% of capital inflows into the economy via the financial account of the balance of payments.

•                93% of the country's electricity generating capacity.

•                About 30% of the country's liquid fuel supply.

•                Between 10% and 20% of direct corporate tax receipts (together worth R10.5-billion).

“In 2009, South Africa's mining industry was the largest contributor by value to black economic empowerment (BEE) in the economy, in terms of the value of BEE transactions completed.”  (South Africa.info - 13.04.12).