The yearly African Mining Indaba will start on February 5 against the backdrop of the local mining industry facing unprecedented challenges, including rail inefficiencies leading to historically low coal and iron-ore exports in 2023, persistent energy insecurity challenges and more than a decade of regulatory chaos, said business organisation Business Leadership South Africa (BLSA) CEO Busi Mavuso.

Mining investment has been weak for some time as companies have held back amid uncertainty over energy availability and the future direction of legislation and regulation. Amendment bills have proposed extreme resource nationalism, giving the State unpaid interests in some sectors and the power to ban exports of key minerals, among many other changes.

"The near absence of exploration spending is more concerning than the lack of expansion investment by South African miners. This means the industry is terminal, with only existing mines being slowly mined out and no new ones opening," she emphasised in her latest weekly newsletter, published on January 29.

The rapid deterioration of State-owned Transnet’s ability to move output across the country and through the ports has resulted in a considerable decline in earnings. Richards Bay coal exports in 2023 were at a 30-year low owing to falling rail volumes, with Transnet delivering 48-million tonnes against a contracted volume of 60-million. Volumes of iron ore have also been falling dramatically with Transnet exporting 51-million tonnes against a target of 60-million, also a historic low.

The National Treasury estimates the economic cost of rail inefficiency in 2023 was about 5.5% of gross domestic product. This has hit the mining industry hard, Mavuso said.

Given the regulatory uncertainty, it is understandable that no miner is committing billions of investment in these circumstances.

The performance of the Department of Minerals Resources and Energy (DMRE) has also been dismal, with not one of the 2 525 mining license applications received in the current financial year having been finalised as of December, she pointed out.

"We have also endured endless delays in the procurement of a new cadastral system to record mining activity across the country, one of the major reasons for inefficiencies in rights processing," Mavuso added.

The Fraser Institute’s yearly survey of investment attractiveness currently ranks South Africa behind Mali and the DRC, with continental leaders Botswana rated as the tenth most attractive mining destination in the world and Morocco rated at sixteenth.

"However, the potential of the mining industry is enormous. The need to decarbonise the global economy means demand for manganese, chrome, vanadium, copper, nickel and iron-ore looks bright, all of which South Africa has in abundance. Despite our long history of mining, we still have some of the best reserves of critical minerals and metals in the world, including 91% of the world’s platinum and 80% of the world’s manganese.

"If it were possible to give the domestic industry a certain and conducive policy environment, efficient regulation and reliable network industries, including electricity and logistics, the gross domestic product and employment impact would be enormous," she emphasised.

The Indaba is an opportunity to showcase what South Africa is doing to improve the environment. The National Logistics Crisis Committee and the logistics roadmap it is overseeing could make a big difference, if it is implemented with speed and focus. Energy security is improving, and miners have been some of the biggest investors in renewable energy owing to regulatory amendments that have enabled them to generate their own power, she said.

Mineral Resources and Energy Minister Gwede Mantashe has also committed that this year his department would resolve the licensing backlog and complete the cadastre procurement. Along with that, he could also resolve the swathe of other unresolved legislative and regulatory uncertainties that hang over the industry, Mavuso advised.

"Only the successful conclusion of reforms will cement confidence. However, the Indaba presents an opportunity to engage with and solicit buy-in from the global industry for the journey," she emphasised.

"I hope that Transnet and the department will be at the Mining Indaba in force to engage with global and local investors to demonstrate that tangible and reliable progress is being made. They must assure investors that efforts to concession part of the Durban port and some rail access will be redoubled and successfully concluded, and that many more concessions of port and rail infrastructure are in the offing.

"Transnet and the DMRE must show that Transnet’s operations are being swiftly improved and the parastatal restructured, including a bailout of its balance sheet, in a credible way," Mavuso said.