South Africa risks losing out on the world’s new ‘gold rush’
The world’s need to decarbonise should benefit South Africa’s mining sector – but government inefficiencies are pushing the industry off the rails.
Business Leadership South Africa CEO Busiswe Mavuso said the rapid deterioration of Transnet’s ability to move resources across the country has resulted in a considerable decline in earnings.
National Treasury said that the cost of rail deficiencies in 2023 was roughly 5.5% of GDP, with Richards Bay coal exports hitting a 30-year low.
The National Union of Mineworkers previously said that that nearly 10,000 jobs could be lost by the end of January 2024 due to the inabilty of companies to export and the decline in commodity prices.
Regulatory chaos has also deterred investment in the mining industry, with Amendment Bills proposing extreme resource nationalism, which could give the state the ability to ban the exports of key minerals.
There are also major inefficiencies in rights procession at the Department of Minerals Resources and Energy (DMRE) due to the endless delays in the procurement of a new cadastral system to record mining activity across the nation.
There has also been a decline in expansion investment in the country and a near absence of exploration spending. This means that are no new mines opening and that only existing mines are being slowly mined out.
Despite these prevailing issues, Mavuso highlighted the huge potential of South Africa’s mining industry – particularly in a world where the country’s reserves are in massive demand.
“Despite our long history of mining, we still have some of the best reserves of critical minerals and metals in the world, including 91% of the world’s platinum and 80% of the world’s manganese.
“The need to decarbonise the global economy means demand for manganese, chrome, vanadium, copper, nickel and iron ore looks bright, all of which South Africa has in abundance,” Mavuso said.
“Were it possible to wave a magic wand and give the domestic industry a certain and conducive policy environment, efficient regulation and reliable network industries including electricity and logistics, the GDP and employment impact would be enormous.”
She added that the National Logistics Crisis Committee – a public-private partnership – and the logistics roadmap could make a big difference if done quickly.
A reduction in the intensity of load shedding and further investment in renewable energy has eased energy constraints in the sector.
In addition, the Department of Minerals Resources and Energy Minister Gwede Mantashe said that the department would fix the licensing backlog and complete the cadastre procurement.
“Along with that he could resolve the swathe of other unresolved legislative and regulatory uncertainties that hang over the industry,” Mavuso said.
“I hope that Transnet and the department will be there (at the Indaba) in force to engage with global and local investors to demonstrate that tangible and reliable progress is being made.
“They must assure investors that efforts to concession part of the Durban port and some rail access will be redoubled and successfully concluded, and that many more concessions of port and rail infrastructure is in the offing.”
Loading ...
