The first in-person Mining Indaba in more than two years starts in Cape Town next weekend in a world and a mining landscape much changed since the last such meeting in February 2020.
What’s officially the Investing in African Mining Indaba has long been a big event on the mining community’s annual agenda. It’s set again to provide a boost to Cape Town’s events industry, not to mention the liquor industry. The organisers are expecting up to 5,000 delegates, with 3,500 already registered and numbers climbing now that it’s clear the indaba will go ahead.
One can’t help wondering whether the last one, with more than 6,500 delegates, was one of the superspreaders that introduced Covid-19 to Cape Town; perhaps this time the flow will be reversed, though vaccine certificates or negative PCR tests will be mandatory for entry to the convention centre.
Typically just over half the delegates come from SA and the rest from around Africa and abroad, with the gathering attracting local and foreign investors and financiers, as well as mining company bosses, government leaders and others. And as always, the gatherings on the sidelines are as or more important than those inside the convention centre.
One of the big changes since the last meeting is what’s happened to commodity prices, which took off as the world started to open up from hard lockdowns in 2020 and have gone stratospheric since then. Another is the extent to which decarbonisation and the energy transition have pushed to the centre of the agenda for policymakers, miners and investors — putting the spotlight on the metals needed to support that, all of which Africa has. The indaba’s big themes reflect that — the green transition, battery metals, the hydrogen economy are all up there, as is much ESG (environment, social and governance), which has become even more of an industry preoccupation than it was two years ago.
But for SA, ultimately the real point of the jamboree is to attract investment into mining. President Cyril Ramaphosa will again be giving a keynote address; so too will minerals & energy minister Gwede Mantashe. This is an opportunity for the South Africans to set out their stall to local and international investors. They are competing for investment dollars and rand with all the other African countries whose heads of state, ministers and officials will be there.
And SA’s dreadful showing on the latest Fraser Institute annual survey suggests it won’t be easy. SA’s ranking on the Fraser Institute’s investment attractiveness index has plummeted to 75th of 84 mining jurisdictions, from 40th in 2019. SA now ranks 12th out of the 15 African jurisdictions.
What’s more, while SA’s balance of payments and its public finances have had a huge boost from the commodity boom, that’s been largely the result of much higher prices for SA’s mining exports — not of higher output. Investment in mining has picked up only marginally after years of decline. And SA still accounts for just 1% of global mining exploration spending, way short of the 3%-5% ambition set out in Mantashe’s recently published exploration strategy.
So what should the government use the indaba platform to say to attract investment into SA mining? Top of the list is infrastructure reform, specifically in rail and electricity. Transnet’s dysfunction has become a huge constraint on the ability of coal, iron ore, chrome and manganese producers to rail their exports to market. The industry has lost R35bn in revenue over the past year relative to previous levels, the Minerals Council estimates, though the opportunity loss is as high as R50bn relative to the capacity those rail lines should be carrying.
What the industry needs to hear is that Transnet will allow private operators to operate SA’s dedicated coal, iron ore and manganese lines — as mining companies do in countries such as Australia. Opening general freight lines to private operators, as Transnet has promised, is not enough to help the miners.
The industry needs to hear too that the government will greatly speed up the process by which mining companies can get registered to build their own renewable energy plants, up to 100MW. Liberalising the licensing requirements to allow them to do that has been a breakthrough since the last indaba, but the process is tied up in such bureaucratic knots that miners estimate it takes up to two years to get the environmental, water, land use and Eskom permits that are required to start building.
The Minerals Council now estimates its members have more than 4.2GW of own-generation projects they are wanting to build — enough to plug Eskom’s energy gap and lessen load-shedding.
SA’s mining companies will also be looking to Ramaphosa for a tangible indication of the government’s intent to address the endemic crime affecting the industry, from the procurement mafia to illegal mining to rampant copper theft and community thuggery.
Also on the list is cutting the red tape that hampers doing business — as Ramaphosa has promised to do, bringing in one of the industry’s own, former Exxaro CEO Sipho Nkosi, to tackle this.
Then there is the backlog at the department of mineral & energy resources of up to 4,000 applications for exploration and mining rights licences that holds up any new investment in mining. And there is the killer for exploration: that SA does not have a functional and transparent cadastral system that allows miners to see who has which licences to explore for what minerals in what areas. Its existing system, Samrad, is broken. Says one mining industry player: “If Mantashe can get on stage and say government is buying a cadastral system off the shelf with proven technology that will be up and running within a year, you will hear angels singing in Cape Town.”
• Joffe is editor at large
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