Significant bottlenecks in mining approval processes, which range from the awarding of prospecting rights to water-use licences and environmental authorisations, are hampering the development of the mining industry, mining investment firm Menar MD Vuslat Bayoglu told delegates attending the Fossil Fuel Foundation Carbon’s Coal Conference 2022 held in Middelburg, Mpumalanga, on April 1.

He held that the red tape in the delay of developing new projects was largely not the fault of the Department of Mineral Resources and Energy (DMRE).

“The departments of [Forestry, Fisheries and the Environment] and Water [and Sanitation] do not issue them within the stipulated period and are delaying project developments owing to endless appeal processes,” Bayoglu said.

He noted that the Minerals Council South Africa had estimated that R90-billion in mining-related projects were waiting in the logjammed regulatory approval processes.

He said, therefore, that President Cyril Ramaphosa’s undertaking to cut red tape was a welcome development. Ramaphosa made the pronouncement in February, which would form part of a sweeping review of economic policy and regulatory frameworks as part of government’s efforts to implement structural reforms.

Bayoglu noted that another challenge faced by mining companies was that some nongovernmental organisations, including some from foreign countries, had taken advantage of the red tape to block mining investment.

“They don’t care about the taxes the State is losing when it delays mining investments,” he lamented.

He further claimed that previous forecasts of the imminent demise of oil and coal had been proven wrong. He explained that oil production remained crucial to world energy security, with liberal news publication Time Magazine reporting in December last year that more power had been generated from coal globally in 2021 than ever before. 

He added that energy demand had continued to increase exponentially, with analysts forecasting global energy demand to reach 830-quadrillion British thermal units (BTUs) by 2050, with coal forecast to comprise 193-quadrillion BTUs.

“Coal demand in China and India is robust and is forecast to continue to remain strong. Moreover, over 1 000 coal plants are currently being planned or under construction worldwide.

“Additionally, there are over 6 500 operational coal plants worldwide that are dependent on coal. Coal demand – even in places like Europe, where coal use has reduced in recent decades – is seeing a marked resurgence in light of energy uncertainty in Eastern Europe owing to Russia’s actions in Ukraine,” Bayoglu noted.

The global outlook for coal was good for South Africa, he believed.

“The search for reliable energy sources like coal from South Africa could provide long-term opportunities for the South African coal mining sector if local logistical and regulatory challenges can be overcome,” he said.

Bayoglu said South Africa had world-class infrastructure. However, State-owned Transnet Freight Rail had been experiencing difficulties in reliably transporting coal to the Richards Bay Coal Terminal (RBCT), in KwaZulu-Natal.

“The decline in rail capacity is of concern. RBCT’s exports have declined sharply in recent years, equating to billions [of rands] in lost revenue. Coal export volumes for 2021 dropped to 58.2-million tons from the 70-million tons of coal exported in 2020,” he noted.

Bayoglu pointed out that proposals by government to bring in third-party, private partners to operate rail were encouraging.

“Access for third parties on the railway network is exactly what industry partners have been requesting for years,” he concluded.