the mining sector, with stocks on the JSE seeing a positive start to the final quarter.
At the opening the fourth quarter yesterday, the JSE Top-40 benchmark index grew 1.8 percent reaching 32,085.81 points, while the All-Share index also climbed 1.4 percent to 36,269.27.
The mining sector appears to be experiencing a come-back following months of dwindling investor interest caused by the violent strikes taking place across South Africa’s mines. Investors had been wary of involvement with the mining sector, the profitability of mining companies being called into question due to two main reasons: loss of profits due to cessations in production, and increases in costs caused by wage hikes in response to illegal strikes.
Most of the big mining operators have seen both strikes, and share price plunges over recent weeks; with mining-related shares tanking massively on Wednesday. Anglo Gold Ashanti suffered a drop of over 5 percent last week, with GoldFields also seeing shares drop by over 2 percent. Coal of Africa took an 18 percent dive as strikes began at the Mooiplaats colliery. Amplats saw a further decrease of 6 percent last week as striking workers refused to return to work.
Overall, it was estimated last week that over 75,000 mining labourers were on strike last week in South Africa – over 15 percent of the sector’s workforce. As such it is hardly surprising that investors were shying away from the usually active sector – causing a slowing at the JSE.
However, yesterday Johannesburg saw the beginnings of a turn around, with investors slowly being drawn back into the mining game. Anglo American was the biggest climber, shares increasing by 2.39 percent to 250.50 rand ($30.05). BHP Billiton also enjoyed a boost, with shares up 3.4 percent reaching 257.85 rand ($30.93).
Coal of Africa naturally continued to enjoy a significant upwards trend in investor interest, following the company’s announcement of a deal reached with China’s Haohua Energy International agreeing a $100 million cash injection yesterday – which saw shares surge by 16 percent almost immediately.
