Despite industrial and economic challenges, 2023 potentially signals the start of a “great era of change and opportunity” for local mining and for South African bank Nedbank CIB, as the bank provides solutions aligned with the decarbonisation trend.
“These opportunities manifest in the provision of sustainability-linked funding solutions, as we partner with responsible miners towards global sustainability goals,” explains Nedbank mining and chemicals sector head Vusi Mpofu.
Nedbank is a longstanding supporter of sustainable mining, and maintains a “strong and well-respected” position in the mining space with respect to providing solutions.
As the mining sector has evolved over the years, Nedbank has played a pivotal funding role in the sector, he adds.
“There are growth opportunities in the sector as commodity and geographical diversification take centre stage – particularly as there will be growing demand for the transition metals required to feed decarbonisation and renewable-energy solutions.
“South African platinum-group metals are also poised to play an important role in the energy transition.”
Mpofu says an important factor in this increased demand for transition metals is that more of these commodities and metals will be found in the “frontier” mining countries north of South Africa.
This is evident in increasing investment flow, particularly from developed nations to other African countries.
Further, he points out that developments in the local embedded-generation industry are ideal examples of an industry initiative that is simultaneously achieving multiple goals.
“In developing renewable-energy projects, miners reduce their carbon footprint and simultaneously contribute to solving the inability of State-owned power utility Eskom to supply power consistently. These projects will also certainly help with reducing power costs going forward.”
The increase in embedded projects comes after the licensing cap for the private generation of electricity was lifted last year.
In terms of challenges for mining, Mpofu warns that the industry will not perform optimally, owing to the failure of critical infrastructure and logistic systems, attributable to the failures of Eskom and State-owned rail, port and pipeline company Transnet.
In terms of exploration, he stresses that a fundamental ledger of record in the form of a functional cadastre is still not in place.
This presents a significant challenge, as a functioning cadastre system is vital to encouraging orderly exploration and the licensing of new mining projects, he contends.
Further, while the capital to support viable mining projects is accessible, South African exploration project developers are frustrated by the inefficiency of the Department of Mineral Resources and Energy, most notably in the failure to implement a transparent cadastre system.
“The year ahead will certainly be challenging for South African miners. The key to unlocking the full potential of the sector lies in finding a workable middle ground with State-owned entities and government to solve infrastructure failings and stable, clear direction on the administration and policy front,” Mpofu concludes.