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Cape Town - Production by gold and diamond miners declined steeply in the past year despite surging commodity prices, Treasury said in its 2011 medium-term budget policy statement (MTBPS) tabled in the National Assembly on Tuesday.
"In the year to August 2011, the overall mining production has declined by 4%, with steep falls in diamonds and gold, despite a 12% increase in primary commodity prices," the document said.
Treasury said overall mining value grew by 6.3% in the first half of 2011, compared to the previous year.
Production of platinum group metals was better, with a 16.3% rise over the period.
The production drop was mainly due to disruptions caused by strikes and safety stoppages, it said.
"Value added in South Africa's mining sector was flat between 2001 and 2008, compared with 12% growth in Chile," according to the document.
Investment growth during the 2000s averaged about 7%, "compared with 24% in Australia".
Several factors had contributed to the underperformance in the period, including uncertainty in the regulatory environment governing the transfer of mining rights; an "opaque" permit-granting process, compounded by inefficient administrative processes; and lengthy waiting periods for the issuance of water licences.
Logistical challenges - including inefficiencies in the rail system and high port challenges - were among other problems, as too were electricity stoppages, which had slowed production.
Gold mining was also now happening at deep levels, with higher costs and risks.
Treasury says the debate on nationalisation had also fed uncertainty among investors.
"In the year to August 2011, the overall mining production has declined by 4%, with steep falls in diamonds and gold, despite a 12% increase in primary commodity prices," the document said.
Treasury said overall mining value grew by 6.3% in the first half of 2011, compared to the previous year.
Production of platinum group metals was better, with a 16.3% rise over the period.
The production drop was mainly due to disruptions caused by strikes and safety stoppages, it said.
"Value added in South Africa's mining sector was flat between 2001 and 2008, compared with 12% growth in Chile," according to the document.
Investment growth during the 2000s averaged about 7%, "compared with 24% in Australia".
Several factors had contributed to the underperformance in the period, including uncertainty in the regulatory environment governing the transfer of mining rights; an "opaque" permit-granting process, compounded by inefficient administrative processes; and lengthy waiting periods for the issuance of water licences.
Logistical challenges - including inefficiencies in the rail system and high port challenges - were among other problems, as too were electricity stoppages, which had slowed production.
Gold mining was also now happening at deep levels, with higher costs and risks.
Treasury says the debate on nationalisation had also fed uncertainty among investors.
