South Africa has a significant extractive industry and many natural resources. From gold to diamonds to platinum to coal, the country's economy is founded upon its mineral wealth. In the case of coal, much of the ore is found concentrated in the north-central region of the country, a characteristic shared across South Africa's mineral resource base.
These industries employ a high number of workers and constitute the bulk of South Africa's exports, and consequently they can significantly affect the value of the South African rand. Any degradation in the health of these sectors indirectly affects other economic sectors. For example, coal-fired power plants generate the majority of the country's electricity and are also used for industrial input purposes. A significant amount of coal is exported to markets in South Asia and East Asia.
Labor contract negotiations are currently taking place between South African coal companies and unionized miners. Wage negotiations in South Africa have the potential to turn violent and disruptive. However, economic and political pressure on mining in South Africa will likely constrain and minimize disruptions.
