The mining industry is struggling in the face of energy and logistics constraints, but signs of progress are sparking cautious optimism. (Michele Spatari/Bloomberg via Getty Images)
SMinerals Council chief executive Muzila Mtenjane said Africa's mining industry could be “on the brink of an upturn”.
He was briefing the media on the current state of the industry ahead of the 30th Mining Indaba in Cape Town this week.
His slightly more positive assessment comes against the backdrop of easing energy and logistics constraints that have caused tensions between miners and the government and hindered industry growth. The Minerals Council also welcomed the government's announcement of the selected service providers for the new cadastral system as an important step towards clearing the country's mineral rights backlog.
The mining rights management system “lists available mineral rights or prospecting rights, properties under mining rights or prospecting rights, the expiry of currently held rights and their ownership.” engineering news.
The frequency and severity of load shedding should ease over the next 12 to 18 months, Minerals Council chief economist Hugo Pinar told a news conference on Monday. Additionally, there are signs that South Africa's logistical constraints – which cost the industry an estimated R50 billion in losses in 2022 – may also start to ease, albeit at a slower pace.
Mineral export revenues fell by more than 11% year-on-year in the first 11 months of 2023 as bulk commodity exporters grappled with Transnet's aging rail infrastructure, according to the council's analysis.
The logistics crisis caused by Transnet was the main target of industry anger at last year's mining indaba.
The hostility between the Minerals Council and Transnet was highly publicized ahead of the 2023 event when a letter by the organization's president, Nolisa Fakude, was leaked to the press. In his letter, Mr Fakude called for urgent action to halt Transnet's decline. These interventions included the Minerals Council's demand for the then Transnet chief executive Portia Darby to be sacked.
Mr Darby subsequently resigned from Transnet. She was followed by the group's former chief financial officer Nonkululeko Dlamini and freight rail chief executive Sizakele Mzimela.
Mr Mutenjene said the relationship between the Minerals Council and Transnet had improved.
The private sector has been working closely with the government through the National Logistics Crisis Committee to halt Transnet's decline. Late last year, President Cyril Ramaphosa's cabinet approved a cargo logistics roadmap. Among the interventions set out in the roadmap is the concession of railway lines to the private sector.
Mr Pienaar said the industry was closely monitoring Mr Ramaphosa's State of the Union address on Thursday for any signs that the government would provide Transnet with a bailout. Confirmation of the relief package came from Finance Minister Enoch Godongwana, and the country's budget is expected to be tabled later this month.
Despite the country's fiscal dilemma, the Godongwana government is not considering a bailout for Transnet, which has reportedly asked the Treasury for a cash injection of more than R100 billion. In December 2023, the Treasury announced that it had agreed to grant Transnet a R47 billion guarantee facility to help rebuild the beleaguered national power company.
The industry will also explore further details about the new cadastral system, which will still take some time to come into force.
Minister of Mineral Resources and Energy Gwede Mantashe, who spoke at the opening ceremony of the Indaba mine, said the government had given the system 12 months to get it up and running to get it set up correctly.
All of this suggests that a real turnaround in the industry will only occur in 2025. Mthenjane seemed to confirm this, noting that 2024 will likely be dedicated to stabilizing the industry rather than expanding it.
Although there continues to be uncertainty about the health of the global economy, which will impact demand for primary goods, South Africans will also head to the polls in 2024. The run-up to elections, in which support for the ANC could see a significant decline, could cause even more anxiety among the private sector, which has refrained from investing amid tough economic conditions and policy uncertainty.
