The mining sector is facing unprecedented challenges. The rapid decline in Transnet's ability to transport produce across the country and through its ports has meant a significant drop in revenue. Richards Bay's coal exports were at a 30-year low last year due to reduced rail traffic, with Transnet transporting 48 million tonnes of contracted 60 million tonnes. Iron ore volumes have also fallen dramatically, with Transnet exporting 51 million tonnes against a target of 60 million tonnes, also a historic low.
The National Treasury estimates that the economic cost of railway inefficiency was around 5.5% of GDP last year.
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This is a major blow to the mining industry, which has already been battling energy insecurity and more than a decade of regulatory chaos. Mining investment has been weak for some time as companies refrain from investing due to uncertainty surrounding energy availability and the direction of future laws and regulations. The amendment bill proposes extreme resource nationalism, giving the country unpaid concessions in some sectors and the power to ban exports of key minerals, among many other changes. . It's completely unclear which of these will eventually become law, and it's completely understandable that no one would invest billions of dollars in this situation.
Read: South African coal exports fall to 1992 levels due to rail disruption
The performance of the Department of Mineral Resources and Energy (DMRE) has also been dismal, with not a single one of the 2,525 mining permit applications received this fiscal year finalized as of December. It has also endured endless delays in procuring a new cadastral system to record mining activities across the country, which is one of the main causes of inefficiency in title processing.
This is the background to the mining indaba that begins next week in Cape Town. Although it remains one of the world's premier mining events, management teams from around the world tend to focus on investments and opportunities elsewhere. The Fraser Institute's annual Investment Attractiveness Survey currently ranks South Africa behind Mali and the Democratic Republic of the Congo, with continental leader Botswana ranked 10th most attractive mining destination in the world and Morocco ranked 16th. Ranked. There is a lack of expansion investment by South African miners, but even more worrying is that exploration spending is almost non-existent. In other words, the industry is in its final stage, with existing mines being slowly mined out and no new mines being opened.
Read: Logistics crisis: Neighbors eat SA lunch
Still, the possibilities are huge. Despite our long mining history, we still have the world's largest reserves of critical minerals and metals, including 91% of the world's platinum and 80% of the world's manganese. The need to decarbonize the global economy means there is strong demand for manganese, chromium, vanadium, copper, nickel and iron ore, all of which South Africa has in abundance. If we could wave a magic wand and give domestic industries a secure and favorable policy environment, efficient regulations, and reliable networked industries, including power and logistics, the impact on GDP and employment would be enormous. It will be.
Indaba is an opportunity to showcase what we are doing to improve the environment. The National Logistics Crisis Committee and the logistics roadmap it oversees could bring about major changes if implemented quickly and intensively. Energy security is improving and miners are the biggest investors in renewable energy, thanks to regulatory changes that allow them to generate their own electricity. Earlier this month, DMRE Minister Gwede Mantashe promised that the ministry would resolve the license backlog and complete cadastral procurement this year. In addition, he was able to resolve a range of other outstanding legislative and regulatory uncertainties confronting the industry.
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Read: Collapsing SA Rail prompts Botswana to explore new routes
I hope that Transnet and its divisions will actively engage with global and local investors to demonstrate that tangible and credible progress is being made. They assured investors that efforts to concession parts of Durban Port and some rail access have been redoubled to successful completion, with further concessions of port and rail infrastructure on the horizon. Must. They must credibly demonstrate that Transnet's operations are rapidly improving and the sub-state is being restructured, including a rescue of its balance sheet.
Trust is only strengthened when these reforms are successfully completed, and the Indaba is an opportunity to engage with the global industry and seek buy-in for this effort. This is a chance you should seize.
Busi Mavuso is the CEO of BLSA.
