“ WE BESEECH THE POWERS THAT BE TO GRAB HOLD OF THE EXTENDED HAND !”
AFRICAN BUZZ •
“ WE BESEECH THE POWERS THAT BE TO GRAB HOLD OF THE EXTENDED HAND !”
By the Minerals Council South Africa
Mining and infrastructure are so intertwined in South Africa that if one fails it spells trouble for the other . If one or more infrastructure systems fail , the consequences of such a perfect storm are a disaster for the minerals sector and the broader economy , needing urgent and united intervention from key stakeholders .
South Africa has three existential and inherent challenges that are inhibiting mining production let alone expansion . The constraints imposed on the mining industry -- and the broader South African economy – by a rapid deterioration in rail and port productivity , erratic and expensive electricity supply , and burgeoning crime are now receiving the dedicated focus of the country ’ s President , Cyril Ramaphosa , who has set up structures with the private sector to address them urgently .
The Minerals Council South Africa , whose members account for 90 % of the country ’ s annual mineral production , has been at the forefront of driving these interventions and it has , through the present and former leadership of its large members , leading roles in each of these workstreams , representing not only mining but the broader business community . The role the Minerals Council and its members play in formulating solutions and actively addressing constraints is clear .
South Africa , which is rich in bulk commodities like coal , iron ore , manganese and chrome , is experiencing the consequences of years of neglect , under-investment in key infrastructure , ruling party ideology of state-centred control of the economy and society , rampant corruption , and the deployment of unqualified or political favourites into key positions in state-owned companies .
Concerns about security are cited as the leading , overwhelming deterrent to investing in South Africa ’ s mineral resources , according to the latest Fraser Institute Survey of Mining Companies .
The urgent need now is to stabilise deteriorating transport logistics and energy supply before returning them to installed capacity let alone growth . To this end , the Presidency has joined forces with business to set up the National Logistics Crisis Committee , the National Energy Crisis Committee and a crime and security team to find and implement quick wins and longer-term solutions in these three areas to stimulate inclusive economic growth and investment , and to address high unemployment .
The Minerals Council South Africa is actively involved in all three streams of work because its members are among the largest users of rail , the ports , electricity and are facing daily challenges with illegal mining , product theft and security concerns at their operations and in their host communities .
An interesting observation is that the three bodies of work involve senior mining figures along with their peers in big business in leading the charge to find solutions to the three challenges .
Nolitha Fakude , president of the Minerals Council and chair of Anglo American in South Africa , heads the energy stream , Neal Froneman , the CEO of Sibanye-Stillwater and former Minerals Council vicepresident , heads the crime and corruption stream , and Mxolisi Mgojo , the former CEO of Exxaro Resources and former president of the Minerals Council , is leading the logistics stream .
Three more capable and focused representatives of the mining industry would be difficult to find . Combined with leading CEOs from other businesses , this is the best shot South Africa has to reverse the alarming deterioration of the economy and all that it entails for 60 million people living in the country . Each leader is keenly aware of the depth and seemingly intractable nature of the challenges the sector faces in those three areas and what the severe consequences of the deterioration in these areas have held to date for not only the mining industry , but the broader economy .
In the recent results coming from mining companies , the financial fall out is starkly apparent . Billions of rands of production has been lost to power failures and constrained transport logistics , while , more disturbing for the future of mining , there has also been curtailment of big capital projects and expenditure .
At the prevailing exchange rate , the Minerals Council estimates South Africa ’ s bulk miners forfeited nearly USD3-billion of revenue in 2022 when rail deliveries to ports were measured against contracted volumes compared to USD2-billion lost the year before .
The deterioration in performance at the state-owned rail and ports company , Transnet , is a consequence of high levels of theft and vandalism of its railway infrastructure , the adverse consequences of corruption , a lack of functioning locomotives and the hollowing out of management and skilled employees .
The Minerals Council estimates that during 2022 some 41 million tonnes of ore were moved by road , resulting in 102 000 trucks a month streaming into ports in South Africa and Maputo in neighbouring Mozambique . In the first three months of this year , that number has risen to 120 000 .
The consequences for communities along trucking routes , road accidents , and the rapid degradation of secondary and primary roads as trucks carrying 35 tonnes each of dusty coal , chrome or manganese has been devastating . A single train can replace up to 400 trucks .
The privately run Richards Bay Coal Terminal ( RBCT ), one of the world ’ s largest coal export facilities , estimates the rail system , on which it is solely dependent , is short of 160 trains . Coal exports through the facility fell to 30-year lows of 49 million tonnes in 2022 . In the four years to 2019 , annual exports were above 70 million tonnes . The terminal has installed capacity of 91 million tonnes .
On paper this is a relatively easy fix . Private sector participation is vital to bring more operating locomotives onto the system and improved management of rail services . The state can make a rapid impact through improved policing and tougher sentences with long spells in prison for culprits to stamp out theft and vandalism of infrastructure .
Similarly , improved and tougher policing of illegal mining , arrests and successful prosecutions of high-ranking criminal syndicate
www . africanmining . co . za African Mining Publication African Mining African Mining • September 2023 • 5