Yes, it's not sexy, but mining still matters

Amid a fourth industrial revolution centred on the technological advances being made by some jeans-and-sneakers-wearing Silicon Valley engineer, South Africa's preoccupation with the fate of antiquated mining giants such as Anglo American often seems so last century.

Critics argue that mining and its affiliated industries account for only 7% of the country's gross domestic product - so why all the bother about where or in whose hands Anglo or any other miner and its assets finally end up?

It's a fair enough point - the high-skilled services sector has been an area of higher growth, especially in the past decade.

But while our energies and focus are being shifted from the blasting and drilling activities of miners that are no longer the centre of job creation, we should not lose sight of their fundamental importance to South Africa's business case.

Some years ago - in fairness, when the commodity supercycle was still with us - our mineral wealth was calculated at about $2-trillion.

For a country with a relatively - and I am being modest here - well-developed mining industry and a growth and unemployment headache that long ago became a migraine, it is a bounty we should be wondering how to share to alleviate our structural woes.

A global race is on now for skills to reap a greater share of the dwindling fruits of the fourth industrial revolution and it's being undertaken by nearly every single country.

While Silicon Valley grabs all the limelight, Israel because of its defence spend is a global leader in the pursuit of the next Facebook or Google. On the continent, East Africa seems to be a leading light.

It's necessary that we follow in this race; no one wants to be left behind. But as a country, our energies should still be focused on this old and at the moment rather unsexy sector that is mining.

For all the bluster about the tech boom, there is little to convince me it will be a jobs panacea for this country or in fact for a global economy that is still struggling to create enough employment. And, anyway, are we not in bubble territory yet? (Never mind that Apple's shares are up more than 33% over the past 12 months.)

I digress.

Corporate activity in South African mining is centred on asset sales or mergers and acquisitions. To many it's a story of an industry in decline.

But there needs to be sharper focus on exactly what miners are giving up when they decide to sell their interests - such as Exxaro Resources disposing of its mineral sands business to US firm Tronox.

Earlier this month, the miner said the sale would help raise funds and help it focus on core coal operations.

Now South Africa is one of the world's largest producers of mineral sands - titanium dioxide slag, rutile and zircon - which are used in paint manufacturing. By doing this deal, the question we have to ask is whether the country's precious metals resource will not just become cheap feedstock for high-value manufacturing outside our borders - the US.

Car makers in East London and Port Elizabeth will no doubt import the finished product at, of course, a much higher price.

Why weren't these plants ever built here? The sale wouldn't have been so painful.

One can't blame Exxaro for serving its shareholders, who will no doubt be on the receiving end of a special dividend. But just how much has South Africa - I mean the nuts and bolts of the real economy - benefited?

Not much. In fact, the competitiveness of the economy will drop another notch.

derbyr@sundaytimes.co.za or follow Ron on twitter @ronderby