Initial signs energy supply is stabilising, logistics to endure for longer – Minerals Council 

16th February 2024 By: Irma Venter - Creamer Media Senior Deputy Editor

The domestic mining industry is looking at 2024 as a year of stabilisation, rather than growth, says Minerals Council South Africa CEOMzila Mthenjane.

The industry continues to face persistent challenges such as loadshedding, an ailing logistics sector, and a declining commodities market.

Mthenjane spoke at a Minerals Council media briefing, held ahead of the Investing in African Mining Indaba 2024 in Cape Town.

The council released data showing that the mining industry’s contribution to South Africa’s gross domestic product declined to 6.2% in 2023, from 7.3% in 2022.

Total primary sales dropped from R883.5-billion in 2022, to R786.2-billion last year.

Overall, mining input costs in South Africa increased by 8.6% year-on-year in 2023 – well above inflation – softening from 13.8% in 2022.

Minerals Council chief economistHugo Pienaarnoted that there were some “very small, initial green shoots” visible in terms of Eskom energy supply as 2024 kicked into gear.

“Let’s hope it continues.”

Pienaar was hopeful that the next 12 to 18 months could see an improvement in both the frequency and severity of loadshedding.

He warned, however, that seeing an uptick in the logistics system would take longer.

Pienaar said the council was seeking the rapid appointment of permanents CEOs in all Transnet executive positions, and for the permanent infrastructure manager to be announced as soon as possible.

“This will be the vehicle through which the concessioning of private-sector involvement on rail is likely to be driven.

“In a very optimistic scenario, this manager is probably up and running by April, May, and then the concessioning needs to start.”

Pienaar also emphasised that Transnet would need funding support from national government, and that such support should be announced in Budget 2024.

“Transnet’s turnaround plan cannot work if there are no funds from national government.”

Jobs in Jeopardy
Minerals Council presidentNolitha Fakudesaid the mining industry was being “severely and negatively affected by the crisis in energy, logistics and crime”.

She noted that crime and corruption remained pervasive challenges for the industry, in terms of not only personal safety for the mining sector’s employees, but also around the issue of illegal mining.

“If these three areas are not driven in a very focused manner by government, business and other stakeholders, it is going to be very difficult to stabilise the economic environment that we need to unlock job opportunities, but more importantly, protect current jobs.”

She noted that a failure to address these challenges would be “disastrous”, not only for the mining sector, but for the economy as a whole.

Fakude added that the mining industry paid R186.5-billion in wages in 2023, up from R174.2-billion in 2022. Employment also rose slightly, to 477000 people, up from 469353 in 2022.

As for the roll-out of a long-awaited electronic mining cadastre, Pienaar said the council was awaiting more detail on government’s recent announcement of the preferred bidder to design and implement a functioning cadastre for South Africa.

“Timelines would be useful. At best, it would be implemented in 2025.”

Pienaar noted that the roll-out of the cadastre could be a game changer for exploration spending in the country.

A minerals cadastre lists available mining or prospecting rights, properties currently under a mining or prospecting right, and the expiry of currently held rights and the ownership of these rights.

It allows companies to apply for exploration, prospecting, mining and related rights, and for the regulator to process such applications.

Looking ahead, Pienaar said an easing in global inflation could see a softening in interest rates in the second half of 2024, which could see economic conditions improve in 2025.