South African government hard at work to resolve challenges in mining

Monday, February 5, 2024

President Cyril Ramaphosa has told leading figures in African mining that government is working hard to address the challenges that the industry faces.

He was speaking during the opening of the 30th Investing in African Mining Indaba held in Cape Town on Monday.

The Indaba is expected to continue until Thursday.

The mining industry contributes a hefty 7.5% to South Africa’s Gross Domestic Product (GDP) and accounts for some 60%, by value, of the country’s exports.

“We are all acutely aware that we face strong headwinds, and a number of persistent challenges are impeding mining performance. Globally, commodity price volatility, high energy prices, geopolitical tensions and a global cost of living crisis are playing a significant role in dampening the business operating environment.

“Domestically, the energy crisis and port and rail bottlenecks are putting serious pressure on miners’ operational costs. Illicit mining, cable theft and infrastructure vandalism place a further strain on mining output and returns. We are committed to work hard and work together to overcome these serious challenges,” he said.

Energy crisis

The President told the gathering that through the Energy Action Plan, government has taken “several critical measures to improve the performance of our existing generation fleet and to add new electricity capacity”.

“The Department of Mineral Resources and Energy has secured 1384MW of new generation capacity that is currently in construction or already in operation. The department has released requests for proposals for the procurement of 5 000MW of renewable energy under Bid Window 7 and 2 000MW of gas-to-power and 615MW of battery storage.

“Transmission capacity remains a challenge especially in the Cape provinces. Eskom has therefore recently published a curtailment regime which unlocks 3 470 MW of additional capacity in these provinces, and which will be essential to the success of Bid Window 7,” he said.

Additional capacity has also been garnered following government’s removal of the licensing threshold for embedded generation.

At least 6 300MW has flowed through this initiative with a third of that supplying mining houses.

Illegal mining and logistics

The President addressed the impact that illegal mining and copper cable theft have on the industry.

On illegal mining, he said: “Since the establishment of a specialised police unit, working with the defence force, we have seen a number of arrests, prosecutions and convictions of the perpetrators of this crime.”

Turning to cable theft and criminality, the President acknowledged that this has “serious impact on key rail freight corridors, including the supply of coal for export through Richard’s Bay”.

“Cooperation between the private sector, Transnet and the security services has resulted in an improvement in the security situation over recent months,” he said.

Delving deeper into the country’s logistics challenges, the President said the system itself is “undergoing a process of rapid and fundamental change to improve its efficiency and position it for the future”.

“By introducing competition in freight rail operations, while maintaining State ownership of the routes, we will unlock massive new investment in South Africa’s rail system. This will support jobs in every sector in the economy, from mining to manufacturing to agriculture.

“Similarly, by upgrading and expanding our port terminals through innovative public-private partnerships, we aim to position South Africa as a leading player in global markets.

“As government, we are alive to the reality that without bold, transformative reforms to the logistics sector, mining cannot flourish. We are working hard, in partnership with the industry, to ensure [the Freight Logistics Roadmap] is implemented without delay,” he said.

The President said mining has a “crucial role to play in building the economy of tomorrow”.

“We look forward to deepening our collaboration with industry as we write a new chapter in the history of South African mining. A story of inclusion, growth, transformation and innovation – and one in which no-one is left behind,” President Ramaphosa said. –