Minerals Council of South Africa president Nolitha Fakude says looking back on 2022, it had been a tough year for everyone, not least the mining industry.
“However, we are determined to continue playing a meaningful role in the economy, society and communities in which member companies operate,” she said. Fakude's was commenting in the Minerals Council integrated annual review 2022, released this week.
She said the mining industry continued to play its part in changing South Africa’s socio-economic landscape in numerous ways.
According to Fakude, in 2022 alone, the mining performance as an industry enabled it to contribute R484.7 billion to the economy, up from R475 billion, keeping the sector as a 7.3% contributor to gross domestic product.
“Exports of R877.4 billion significantly improved compared to R834 billion a year earlier. For the second consecutive year, the value of production was above R1 trillion, increasing to R1.18 trillion from R1.1 trillion.
“The value we add and share as an industry comes in many forms. Through our total economic contribution, we have enabled local companies to grow and thrive by being very deliberate about procuring from local suppliers in our host communities, those owned by black South Africans and those owned by women and young people,” she said.
Fakude said the industry grew employment to nearly 469 000 during 2022 from 460 000 the year before.
“Mining industry employees’ earnings of R174 billion were substantially higher than R165 billion before. The sector spent more than R5 billion on human resources development, with a further R1.7 billion paid to the skills development levy,” she said.
Fakude said the economy was not growing, job prospects were poor for school leavers and youth in general, and one in three adults could not find work, leading to high rates of crime, despondency and social ills.
“The industry spends more than 1% of its net profit after tax on community development projects annually. Mining companies often implement social development initiatives before they start production or selling products,” she said.
Outgoing Minerals Council CEO Roger Baxter said like many of the years before it, 2022 was both challenging and difficult for the mining sector and the country.
“That said, the Minerals Council continued to implement the board-approved strategic plan and was able to continue to make material progress against our objectives,” he said.
Baxter said the Council invested significant effort with members into engaging the government and Transnet on the country’s rail crisis.
“Based on actual performance versus target, the sector lost over R50 billion in exports in 2022. If one takes the nameplate capacity of the rail infrastructure or enhanced nameplate capacity, the economic opportunity cost is more than R150 billion in lost exports and R27 billion in taxes to Treasury.
“The Council established a joint Recovery Steerco and Plenary structure with Transnet to focus on the short-term stabilisation of performance in the four major bulk commodity export channels,” he said.
According to Baxter, in the medium term, there is huge potential to unlock the value of mining through regulatory reforms, such as issuing a prospecting right in 20 working days through a transparent cadastral system, liberalisation of rail, ports, electricity, and water to enable real private sector investment, competition and growth, and recognising the importance of mining. “Realising the country’s true critical minerals and green hydrogen capability through platinum-based proton exchange membrane (PEM) fuel cells, through modernisation, and realising the real capability of South African people,” he said.
The Minerals Council announced recently that it appointed former executive head for Stakeholder Affairs at Exxaro Resources Mzila Mthenjane as its new CEO. Baxter will leave his position after 30 years at the helm of the Council.
Meanwhile, Mineral Resources and Energy Minister Gwede Mantashe said at the Minerals Council annual general meeting that mining companies could supplement state-owned Eskom’s supply of electricity.
“A success story is registered in the performance of Gold Fields, which registered a 10% production growth despite the 9% decline year-on-year in the sectors’ overall production. This is because they completed their 50 MW plant, which is giving them enough energy and registered some surplus. Therefore, the industry’s investment in expanding its own electricity capacity to power its operations gives us hope,” he said.
Mantashe said as per the announcement during the department’s budget vote, the department will, in this financial year, procure 10 000 MW of renewable energy under Bid Windows 7 and 8, 3 000 MW of gas-to-power, 2 500 MW of nuclear energy, and 1 230 MW of battery storage.
He said there was a need to ensure base load security.
“Why do I think coal is the future? I don’t talk coal. I talk base load. Renewables, without a partner technology to provide base load, will not help us industrialise. As we increase the contribution of renewables, we must equally increase the support of the base load. It can be batteries, it can be nuclear, it can be a bit of coal,” he said.
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