The Minerals Council of South Africa yesterday welcomed President Cyril Ramaphosa’s address to the Mining Indaba, but stressed the urgency of action, after he said the government was working as fast as it could to remove impediments to investment in the sector, including on its energy and rail problems.
Ramaphosa said South Africa was a long way from realising the full potential of its mining sector. The R1.8 trillion record turnover generated by mining last year was despite a 9% drop in production due to load shedding and logistics challenges, while illegal mining and security of infrastructure, and the pace of structural reforms, were other concerns that investors had expressed about investing in South Africa’s mining industry.
“These are issues that the government is pulling out all the stops to address,” he said. He said mining could not function without electricity and in the six months since the National Energy Action Plan was announced, work was underway to get the six most problematic power stations to function optimally. Ramaphosa said he was receiving daily updates on the progress of this work.
In addition, some 25 new renewable power generation projects had been approved and construction was expected to start on these soon. There were talks to also acquire up to 1000 megawatts from neighbouring countries - 300 megawatts had already been acquired.
He said 89 embedded power projects had been announced by mining companies since the government had lifted the licensing requirement, and these were expected to significantly bring down the cost of power to the sector, as well as contribute to national power generation capacity.
Referring to the impact of the logics challenges such as the loss of 15% of manganese mining revenues last year, and Richards Bay coal terminal reporting its lowest export volumes since 1993, Ramaphosa said that labour and business needed to “stop moaning and get into the ring with us, let us find solutions for our country together.”
Deloitte Africa Energy, Mining & Industrials Lead Andrew Lane said in a statement that while the Minerals Council was working with Transnet to address rail issues, “the industry needs to see action. There is a growing frustration from the industry around corruption, logistics and energy that are not being addressed.”
Ramaphosa said a new policy framework was in place to upgrade the rail system, with the participation of private investors in some cases.
He said a multi-disciplinary police-led task team was in place in 20 hotspots of infrastructure damage and theft, and hundreds of operations had been conducted in six months, with many arrests. Transnet, with private security personnel, was also working on improving the security of their assets.
African Rail Industry Association (Aria) CEO Mesela Nhlapo said at the start of the Indaba the White Paper on National Rail Policy, approved by the Cabinet in March last year, did outline steps to revitalise rail infrastructure and enable third‐party access to the freight rail network.
However, onerous restrictions on private sector participation and investment rendered the whole reform process meaningless. “Aria believes the provisions in the National Rail Policy need to be implemented correctly for the revival of South Africa’s rail network,” said Nhlapo.
He said the mining sector was in effect facing an existential threat due to the continued deterioration of Transnet’s rail freight volume capacity.
He said third-party freight operators held the key to unlocking the full potential of the mining industry.
Ramaphosa said a mining cadastral system was in the process of being acquired, and the mining licensing backlog had been reduced by 42% over a year.
He said also that the government was reducing the time required for licences and other approvals, and for instance the time for certain environmental approvals had been reduced, and exemptions were granted in certain circumstances.
Roger Baxter, Minerals Council CEO, said “President Ramaphosa’s speech hit all the right notes... but it is absolutely vital that we see real urgency on implementing the interventions and measures he outlined. We need action. The time for talking has long passed.
”We are encouraged by the government’s recognition that it must buy a proven, off-the-shelf cadastral system rather than developing a bespoke system. It’s key to bringing in new entrants into the sector. We would encourage the DMRE (Department of Mineral Resources and Energy) to resolve the backlog of thousands of rights in the next six months rather than in the medium term.”
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