Manuel Says South Africa Mining at `Risk' From Crisis

By Nasreen Seria

Oct. 22 (Bloomberg) -- South African Finance Minister Trevor Manuel said the country's mining industry is at ``risk'' because of the fallout from the global financial crisis.

``Demand is likely to fall and prices will be low,'' Manuel said in an interview with Johannesburg-based South African Broadcasting Corp. today.

The price of platinum, South Africa's biggest export, has plunged 58 percent in the past six months, dropping as low as $838.10 an ounce in London today. The slump in commodity prices has undermined the rand, which fell below 11 to the dollar for the first time since April 2002 today.

South Africa's mining output declined 6.2 percent and non- gold production fell 3.5 percent in August from a year ago, Pretoria-based Statistics South Africa said on Oct. 9. A drop in mining production may lower corporate profits and tax earnings next year, Manuel said in his mid-term budget yesterday. The government is forecasting a budget deficit of 1.6 percent of gross domestic product in the year beginning April 1, compared with a February forecast of a 0.6 percent surplus.

The rand will probably remain under pressure because of ``irrationality'' on global equity markets at the moment, Manuel said.

``Some of that roller-coaster ride will remain over the next few months,'' Manuel said. ``On the exchange rate, my advice is to fasten our belts.''

Manuel told lawmakers in Cape Town today that the government favored a ``competitive and stable exchange rate,'' declining to say what level of the currency he preferred.