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The sustainability of the South African mining industry and its ability to play a meaningful and positive role in society and the economy are dependent on urgent and extensive structural reforms in the energy and logistics sectors, mining industry organisation the Minerals Council South Africa has asserted in response to President Cyril Ramaphosa‘s February 8 State of the Nation Address (SoNA).

A stable, aligned and consistent regulatory environment with efficient administration is essential to attract and retain investments in exploration, mine development and mining, the council emphasised.

“We must continue with vigour to implement the structural reforms necessary to encourage and facilitate the private sector’s participation in energy generation and transmission, rail and port operations, and water reticulation,” said Minerals Council CEO Mzila Mthenjane.

“It is imperative to arrest and stabilise performances in these services that have severely constrained the mining industry’s growth and contribution to economic development, which needs to reach growth levels of more than 5%,” he said.

Further, the Minerals Council has also welcomed government’s commitment to the establishment of a green hydrogen economy.

South Africa’s platinum group metals (PGMs) are used in the electrolysers that make hydrogen and the fuel cells that use hydrogen, making green hydrogen an important source of demand for these metals as the world reduces carbon emissions and turns to renewable and sustainable energy sources.

“Mining delivered on its side of the social bargain during 2023, despite mixed commodity prices and a tough operating environment. Mining was one of the few economic sectors to create jobs in 2023, growing employment by more than 7 500 to 477 000.

“Wages increased by 7% to R186.5-billion, supporting many families and their dependants, while the total contribution to the fiscus grew by R9-billion to R135.3-billion,” Mthenjane highlighted.

“In this election year, the country requires that the government focus on the critical reforms necessary to save our economy, as livelihoods are at stake.

“We have observed and experienced the positive impact of mining under challenging operating conditions. A more conducive and enabling operating environment, with regulatory certainty and consistency, and functional infrastructure and municipalities, will demonstrate a lived experience that mining matters,” he said.

Further, the launch of a R400-million government fund for exploration will start to address the dearth of investment in mineral prospecting in South Africa, which has attracted less than 1% of global exploration funding for the past three years.

“However, for these funds to be efficiently used, the introduction of an efficient, transparent and modern cadastral system to digitally manage prospecting and mineral rights applications is essential. The Department of Mineral Resources and Energy has announced the winning consortium to implement the system, which is a much-awaited milestone by the industry,” he noted.

Ramaphosa, in his SoNA, mentioned water projects that are under way.

“However, the scale of the problem must be acknowledged, as well as the cost to address water reticulation affecting communities, mines, agriculture and businesses in Limpopo, Mpumalanga and the Northern Cape.

“Water is a crisis facing the mining industry and the country as mentioned by the President,” Mthenjane emphasised.

The mining industry is increasingly active in partnering with the government to provide funding to repair, maintain and build water reticulation systems in these regions. However, a clear government roadmap and pragmatic strategy to include the private sector to urgently address water reticulation will be necessary, he emphasised.

Further, the organisation welcomed the signs of progress coming from joint business and government interventions in logistics, energy and crime and corruption, highlighted by the President.

“Of equal urgency [to structural reform] is the implementation of interventions developed by business and government role players to address crime and corruption, which continue to affect business performance, freedom of movement and the broader well-being of society, as well as damaging South Africa’s reputation as an investment destination,” Mthenjane added.

Additionally, the Minerals Council is gratified that green shoots are coming from the Presidency-led partnership established eight months ago with Business for South Africa in the National Energy Crisis Committee (Necom), the National Logistics Crisis Committee and the Joint Initiative on Crime and Corruption in which the Minerals Council and its members are participating.

Necom forecasts loadshedding will end by 2025, as more private sector companies enter the energy sector and Eskom stabilises the performances of its power plants, he noted.

Meanwhile, structural reforms and recovery plans are in progess to stabilise State-owned Transnet’s rail and port services as well as encourage the private sector’s participation.

There was a two-thirds reduction in infrastructure security incidents on the coal line to Richards Bay between September 2023 and January, with coal mining businesses providing financial and technology support to enable security and protection for the railway, he highlighted.