government has earmarked R845-billion for capital projects and its State-owned acolytes Eskom and Transnet another R400-million.
Such huge capital expenditure is only economically feasible if there is an anchor user capable of paying most of the bills.
A point that the Chamber of Mines makes validly in its latest fact sheet is that mining is the unsung hero in all this.
“The contribution of mining to capital investment by the State-owned enterprises is a significant but unrecognised contribution by the mining sector to fixed investment and the growth of the country’s productive fixed capital stock,” is how the chamber puts it.
The use of the word ‘unrecognised’ is wholly justified in that there is a failure to acknowledge that without the user charge fees paid by the mining companies over the next 10 to 20 years, these infrastructure upgrades would be without the critical mass that makes them economically attainable.
As the chamber correctly points out, all the capital and operating costs will ultimately have to be recovered from users, of which mining is far the single biggest.
More than half of Transnet Rail Freight’s expected capital cost will be recouped from mining, which accounts for 50% of the State-owned enterprise’s rail freight business.
With the same cost recovery mechanism playing out in the electricity sector, mining and smelting will pay for more than 40% of Eskom’s outlay.
The chamber calculates that mining companies will in all likelihood pay nearly R50-billion of Transnet Rail Freight’s capital costs and R100-billion of Eskom’s capacity expansions.
It is time for finger pointing to end and for South Africans to work together vigorously to replicate what mining and its many economic linkages have achieved on the southern tip of Africa, throughout the rest of the continent, where the country is badly lagging the rest of the mining world.