Ramaphosa commits to support mining sector in the wake of serious local and global challenges

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By Zablon Oyugi

President Cyril Ramaphosa has expressed his commitment to support South Africa’s mining industry in the wake of serious local and global challenges.

Speaking during this year’s Investing in African Mining Indaba event at the International Convention Centre in Cape Town, the president said that indeed there are strong headwinds, and a number of persistent challenges 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. However, we are committed to work hard and work together to overcome these serious challenges,” said Ramaphosa.

According to him, last year the government outlined four objectives to develop the sector, improve its global competitiveness and harness the global drive towards sustainable development.

These include one, to secure supply of electricity through Electricity Action Plan to improve the performance of our existing generation fleet and to add new electricity capacity, two, to accelerate economic reforms to improve the operating environment through a number of reforms to enable businesses to operate optimally and to tackle illegal mining and damage to infrastructure through establishment of a specialised police unit, working with the defence force to hunt, prosecute and convict perpetrators.

Milestones

So far, the Department of Mineral Resources and Energy has secured 1 384 MW of new generation capacity that is currently in construction or already in operation.

The Department has released requests for proposals for the procurement of 5 000 MW of renewable energy under Bid Window 7, 2 000 MW of gas-to-power and 615 MW of battery storage.

Also, Since the removal of the licensing threshold for embedded generation, the National Energy Regulator of South Africa has registered no less than 1 312 generation facilities with a combined capacity of over 6 300 MW. Around a third of this capacity supplies the mining load.

“It is encouraging that more and more mining companies, including Gold Fields, Anglo American, Seriti and Exxaro, are beginning to take advantage of these reforms to power their mining operations and curtail their operational costs,” said Ramaphosa.

Tackling illegal mining, Department of Mineral Resources and Energy since 2019 has closed and sealed 251 derelict holes and shaft and intends to close a further 352 shafts in the next three years.

Sector transformation

Working with industry and labour, the democratic government has been able to effect wide-ranging and sustainable transformation of the sector over the past three decades.

Since 2004, the year the Mining Charter was first introduced, black ownership in the industry stood at some 2 per cent. Today, this stands at approximately 39 per cent.

During apartheid, the mining sector was notorious for labour exploitation, human rights violations, and poor health and safety standards. Today, miners employ approximately 476 000 people.

Transport

Concerning transport, the president said the country’s freight logistics system itself is currently undergoing a process of rapid and fundamental change to improve its efficiency and position it for the future.

“Working with the private sector under the auspices of the National Logistics Crisis Committee, we are working to overcome the challenges with ports and rail. The Freight Logistics Roadmap, which has recently been approved, sets out a clear plan to guide this process.”

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

Minerals key to the global energy transition in Africa

Ramaphosa indicated that the vast majority of the minerals that are key to the global energy transition which include manganese, iron ore, copper, cobalt, nickel and platinum group metals lie beneath the soil in Africa.

This places Africa as the potential to be the fulcrum of the global energy transition, with mining at its core.

“This Indaba must prioritise deliberations around how we can leverage these changes to breathe new life into mining, to strengthen mining value chains, and to enhance beneficiation.”

The event so far has witnessed 11,000 registered participants, 8,000 delegates from 126 countries attended on day one.

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