The Minerals Council has described President Cyril Ramaphosa’s comments about bringing private investors into the Durban and Ngqura container terminals and private train operators on the container railway line between Durban and Johannesburg as a step in the right direction, “but for the mining industry the railways and ports servicing companies exporting bulk minerals need urgent attention and private sector participation to deliver efficiencies and productivity”.
Red tape is delaying investment worth R90-billion in ready-to-go mining-related projects, at a time when the South African economy is in desperate need of such projects proceeding, to create jobs and to stimulate economic growth.
Projects worth R30-billion would be able to proceed if the 4 000-plus mining and prospecting rights backlog could be eliminated, and R60-billion worth of renewable energy projects could release 3 900 MW into the energy space if inhibiting bureaucracy were removed, Minerals Council South Africa has revealed in response to President Cyril Ramaphosa’s State of the Nation Address (SoNA).
Against the background of the President appointing stalwart Sipho Nkosi to remove red tape, Minerals Council CEO Roger Baxter stated; “We need to do things completely differently to get economic growth back to 5% per annum. The government should be the chief enabler and the private sector the chief doer,” said Baxter, who cited the mining sector’s full and partial Covid-19 vaccination of 74% of its 450 000 employees with the assistance of the Department of Health as an example of the private sector’s ability to assist the government.
The SoNA has opened the door for partnerships with the State to reverse the economic slump the government cannot address on its own.
Such partnerships could also extend to companies that mine iron ore, coal, chrome, and manganese. These companies have experienced increasingly severe disruptions to their export logistics because of the inability of Transnet to provide a reliable rail and port service, owing to rampant crime on its railways and the unavailability of locomotives. As a result, South Africa had lost at least R35-billion in potential exports in 2021, the council estimated.
Moreover, problems at Richards Bay had resulted in chrome exporters sending their products by road to Mozambique’s Maputo harbour. Since 2019, R2.9-billion worth of South African chrome has been exported through Maputo, which meant less revenue for Richards Bay and its owner Transnet Port Terminals. Ferrochrome and coal exports were also increasingly being sent through Maputo because of the inefficiencies of Transnet rail and ports.
On the energy front, the renewable energy project plans of Minerals Council member companies can substantially contribute to bridging the large electricity supply deficit in the country, diversifying the country’s supply, reducing the sector’s carbon footprint, and stabilising costs.
“Bureaucratic and red tape delays have meant these projects cannot assist in easing South Africa’s energy deficit. An unbundling of Eskom by end-2022 is a key structural reform, while amendments to the Energy Regulation Act to create a competitive electricity generation market and the establishment of an independent state-owned electricity transmission company underpins that reform,” the council stated.
“One of the most pressing problems the government must address immediately is a crime, which has destroyed the country’s rail infrastructure, damaged investor confidence and has affected lives and livelihoods across the country,” the council stated.
“President Ramaphosa’s commitment to expediting legal action against those named in the Zondo State Capture reports, and the inclusion of the private sector to assist in these actions, will send a clear message to all South Africans about the government’s bona fides in ending corruption if guilty high-level politicians and business people are prosecuted and jailed.
“President Ramaphosa’s commitment of deploying specialist units to tackle criminal gangs – known as procurement or construction mafia – disrupting mines and other areas of the economy need to bear fruit, while his promise of leadership changes of various security agencies to improve the fight against crime is long overdue.
“We will apply our resources, our capability, to working in partnership with the government on an inclusive growth strategy, and on initiatives like the development of a National Security Strategy to combat crime. Crime is a pervasive issue that affects everyone, not just the mining sector. If we don’t deal with crime, particularly the criminal syndicates and construction/procurement mafia, it will continue to have material impacts on long-term investment sentiment,” said Baxter.
The ability to expand the South African mining industry in strategic minerals that are crucial for clean energy, such as platinum, vanadium, cobalt, copper, manganese and lithium, was noted by President Ramaphosa during the SoNA, in which he highlighted the country’s unique opportunity in green hydrogen, given our world-class solar and wind resources and local technology and expertise, and abundance of platinum-group metals.
President Ramaphosa stated in his SONA address that several catalytic projects to the value of R21-billion were expected to start construction this year. Of this, R2.6-billion would be contributed by the government and the balance from the private sector and development finance institutions.
The president said that government would make an initial investment of R1.8-billion in bulk infrastructure, which would unlock seven private sector projects to the value of R133-billion.
Nearly four years ago, South Africa set itself a target of mobilising R1.2-trillion in new investment over five years. By the time of the third South Africa Investment Conference in November 2020, the country had reached R776-billion in investment commitments.
Next month, on March 24, South Africa is scheduled to hold its fourth South Africa Investment Conference in Johannesburg.
Positive for Africa as a whole is the resolution of the Africa Union to allow trading to begin under the African Continental Free Trade Area agreement.
“South African companies are poised to play a key role in taking up the opportunities that this presents for preferential access to other African markets,” President Ramaphosa said during the song.
“The free trade agreement is about Africa taking charge of its destiny and growing its economies faster,” the President added.