The Minerals Council always launches its annual facts and figures booklet before the Investing in African Mining Indaba in Cape Town, helping to provide a frame for conversations about SA’s mining industry.
This year the launch came just days after the national energy regulator granted Eskom a 12.7% tariff increase for this year, an outcome which Minerals Council chief economist Hugo Pienaar described as “bittersweet”.
There was great relief that it wasn’t the 36% Eskom asked for. But it was still way above inflation. Pienaar’s numbers show that on average since 2012/13, Eskom tariff rises were double the overall inflation rate. At least the next two years’ tariff rises are closer to inflation, even if this poses renewed risks for Eskom’s balance sheet. But electricity tariffs are just one of the constraints weighing on SA’s mining industry.
Electricity supply has now stabilised, with more than 300 load-shedding free days, but mining output hasn’t really picked up in response, suggesting that all the other constraints weigh as heavily.
Chief of these is Transnet. Its performance stabilised too over the past two years. But rail volumes are still far below their 2017/2018 peak and even further below what SA needs to lift its exports of coal, iron ore, chrome, manganese and other foreign commodities and reverse job losses caused by Transnet’s woes.
Nor are energy and logistics the only constraints. Crime and corruption continue to make life difficult and costly for miners. So too do SA’s mining regulators. There too one might have described the news from the indaba as “bittersweet”.
Mineral & petroleum resources minister Gwede Mantashe was in full populist spate as he opened the event, suggesting SA should withhold mineral exports if the US withholds aid money, as well as making it clear that coal was more of a “critical mineral” as the green energy transition minerals that western countries have defined as critical.
SA’s dysfunctional system for applying for and registering mining and prospecting licences has been an issue at every indaba for years. This time Mantashe promised that the new cadastral system, awarded to a Canadian-led consortium, would be up and running by midyear.
We will believe it when we finally see it. It comes after a decade of dysfunction that caused huge uncertainty in the industry and all but halted mining exploration in SA, which doesn’t even know the full extent of its rich resources at a time when the world is desperate for critical minerals however defined, because nobody has been able to explore for them.
Mantashe promised the industry a review of mining regulations and is busy finalising an industry study aimed at boosting growth and job-creating potential. Whether he and his department make it easier for investors to put money in the industry and make the most of its potential is a question.
As it is, the indaba has increasingly focused on Africa rather than SA in recent years, because many of our neighbours on the continent have done much more to make themselves attractive for investment. We can but hope that by next indaba, SA can show progress on doing likewise.
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