R10 million a day gut punch for one of South Africa’s biggest employers

South Africa has suspended operations at the Lebombo border crossing with Mozambique, a critical hub for coal and chrome exports, due to escalating protests.

Demonstrators in Mozambique, enraged by the results of the country’s October elections, have blocked the vital route, which typically handles over 1,000 trucks daily bound for Maputo’s port.

The unrest has also led to the shutdown of two power plants and targeted other essential infrastructure, further highlighting the protests’ widespread disruption.

The suspension of border activities was confirmed by South Africa’s Border Management Authority, which announced the halting of general cargo processing and passenger movements on Monday (9 December).

Acting Commissioner Jane Thupana urged transporters to avoid dispatching vehicles to the port until further notice.

Previously, truck crossings into Mozambique were still possible after daily protests subsided around 16h00, but the full closure represents a significant escalation.

The economic ramifications of this closure are severe. According to the Road Freight Association, the stoppage is costing South Africa approximately R10 million ($562,822) daily, a sharp blow to the mining and logistics sectors.

Mozambique will also be hard hit as reduced exports undermine a key source of foreign exchange for the country.

The border disruption comes at a time when South Africa’s mining industry, already grappling with labour disputes, regulatory uncertainties, and rising crime, can ill afford further setbacks.

The protests stem from contested election results in Mozambique. Opposition leader Venâncio Mondlane, who claims to have won the presidential election despite official results placing him second with 20%, has called for ongoing demonstrations.

Reports from local groups indicate over 100 deaths since the unrest began on 21 October, as police have responded with teargas and live ammunition.

Last week, Mondlane called for an additional seven days of protests, signalling no immediate end to the turmoil.

For South Africa’s mining sector, the closure of the borders post compounds an already dire situation.

Once the cornerstone of the national economy, the industry continues to employ approximately 477,000 people and generate significant tax revenue.

However, it faces declining profitability due to stagnant commodity prices, high operational costs, and logistical challenges.

Companies like Sibanye Stillwater have been forced to cut over 11,000 jobs since 2023, while Impala Platinum has warned of the need for drastic cost reductions to prevent further restructuring or potential closures.

Despite low debt levels offering some financial stability, mining firms are under mounting pressure.

Rising operational expenses, partly driven by investments to stabilise faltering infrastructure such as Transnet, are squeezing budgets for growth and expansion.

S&P Global has underscored the precarious state of the industry, highlighting the potential for further setbacks if these challenges persist.

Reported with Bloomberg

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