The government yesterday outlined measures it hopes will deal with the crime, energy and logistics problems that are seriously crimping investment, profitability and output in mining.
President Cyril Ramaphosa said at the Mining Indaba in Cape Town yesterday that securing the supply of electricity was the first of four objectives being implemented to develop the sector and make it more competitive.
Mineral Resources and Energy Minister Gwede Mantashe said at the event that commodity price volatility, high energy prices, geopolitical tensions and a global cost of living crisis were dampening the business environment for mining companies.
Also, locally, the energy crisis and port and rail bottlenecks had put pressure on miners’ operational costs. Illegal mining, cable theft and infrastructure vandalism also placed a further strain on mining output and returns.
Patrick Leyden, a mining law expert at Herbert Smith Freehills, said the minister had offered solutions to the challenges to mining, including: special task teams, public-private infrastructure partnerships, the establishment of an investment fund focused on exploration and a new cadastral system.
However, Leyden said: “Perhaps a glaring omission is the challenge of illegal mining, which is costing the fiscus and private sector billions of rands annually. While the minister’s proposed solutions are laudable, the timing and actual implementation of these proposals remains key. As they say: the proof is in the proverbial pudding.”
Ramaphosa said through the government’s Electricity Action Plan, the Department of Mineral Resources and Energy had secured 1 384 megawatts of new generation capacity, which was in construction or already in operation.
He said the department had also released requests for proposals to procure 5 000MW of renewable energy under Bid Window 7, as well as 2 000MW of gas-to-power and 615MW of battery storage energy.
To deal with transmission problems in some provinces, Eskom had published a curtailment regime that unlocks 3 470MW of additional capacity in area where transmission is a problem, and which is essential to the success of Bid Window 7.
Ramaphosa said the second measure were reforms to enable businesses to operate better. For example, since removing the licensing threshold for embedded power generation, the National Energy Regulator of South Africa has registered 1 312 generation facilities with a combined capacity of more than 6 300MW. Around a third of this capacity supplies the mining load.
Mining companies such as Gold Fields, Anglo American, Seriti and Exxaro have started to take advantage of these reforms to power their operations and curtail operational costs, said Ramaphosa.
On illegal mining and damage to infrastructure, Ramaphosa said a specialised police unit, working with the defence force, had seen a number of arrests, prosecutions and convictions for this crime.
The Department of Mineral Resources and Energy, through Mintek, has also sealed 251 derelict holes and shafts, and over the next three years, a further 352 shafts are planned to be closed.
Criminal activity, and copper cable theft, in particular, has had a serious impact on rail freight corridors, including the supply of coal for export through Richards Bay.
Mantashe said co-operation between the private sector, Transnet and security services had resulted in an improvement in the security situation in recent months.
He said South Africa’s freight logistics system was undergoing rapid and fundamental change to improve its efficiency and position it for the future.
Working with the private sector under the National Logistics Crisis Committee, challenges with ports and rail were being addressed.
“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,” said Ramaphosa.
“Similarly, by upgrading and expanding port terminals through innovative public-private partnerships, we aim to position South Africa as a leading player in global markets,” he said.