22 April 2020

    On March 5, South Africa confirmed its first case of COVID-19. Seeking to mitigate its impact on public health, on March 23, President Cyril Ramaphosa announced a nationwide lockdown from March 27 to April 17. The order pertains to all businesses, with exceptions provided for pharmacies, laboratories, banks, supermarkets, petrol stations, and healthcare providers. On April 10, President Ramaphosa cited evidence that the national lockdown was effectively limiting the spread of COVID-19 and extended the lockdown end date from April 17 to May 1.

    Sources estimate that by March 27, nearly all of South Africa’s 239 operating mines halted operations in compliance with the national lockdown. Exceptions were noted for a small number of thermal coal mines, which were permitted to continue operations for the purposes of ensuring national energy needs. Overall, the mining sector accounts for approximately 8% of South African GDP and employs approximately 450,000 workers.

    Material % global supply
    Platinum 77
    Kyanite 55
    Chromium 45
    Palladium 39
    Vermiculite 39
    Vanadium 38
    Zirconium 30
    Manganese 21
    Rutile 20
    Ilmenite 19

    South Africa is a critical global supplier of several key raw materials, most notably platinum (see table). Platinum is a common element used in automotive catalytic converters, turbine engine parts, nitric acid products, electrochemical processes, laboratory equipment, electronics and wiring, platinum resistance thermometers, medical equipment, and jewelry. Between 73% and 80% of global platinum-bearing ore is sourced from the Bushveld Igneous Complex, a large area north of Johannesburg that is known to contain some of the richest ore deposits on earth, including platinum group metals, chromium, and vanadium.

    As platinum and other raw material markets assess the likely impact of mining halts in South Africa, uncertainty over work authorization for mines is decreasing. On April 8 the Minister of Mineral Resources Samson Gwede Mantashe stated that the production of gold, chrome, manganese, iron ore, and other sectors would “operate at scaled down levels, to allow smelters which cannot be switched on and off abruptly, to remain operational.” On the same day, sources reported that an in-principle agreement was reached among industry association Minerals Council SA, multiple unions, and the South African government that 60% to 70% of the mining labor force would return to work on April 16 and 17. However, on April 9, the Minerals Council noted that the nature and spread of COVID-19 in South Africa would remain a factor, suggesting that the target date for a broad resumption may have changed after President Ramaphosa’s extension of the national lockdown on April 10. On April 16, sources confirmed that mines would be permitted to resume operations at 50% capacity. As production tentatively resumed on April 16, the local police at some mining sites reportedly prevented workers from entering sites as they awaited official confirmation of the relaxation.

    Further impacts on the continuity of raw material supplies from South Africa are highly dependent on the public health-related regulatory environment. Supply chain managers should continue to monitor developments with the national lockdown and special operating privileges granted to the mining sector. Additionally, supply chain managers should work urgently with suppliers and their sub-tier suppliers to identify what key raw materials are being sourced from South Africa and the impact that a potentially-impending supply interruption would have on their production. Where applicable, supply chain managers should verify that alternative sources of raw materials have been secured, or provide support to suppliers in sourcing alternative raw material supplies.

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