Ramaphosa talking as mines bleed

As President Cyril Ramaphosa conceded to factors contributing to strain in mining – such as the energy, ports and rail crisis – the industry yesterday cited the rapid decline in mineral prices for having led to the fall in exports by more than 11% to R781.6 billion.

Strong headwinds

Addressing the 2024 Investing in African Mining Indaba in Cape Town yesterday, Ramaphosa said government and the mining sector were “acutely aware that we face strong headwinds”, and “a number of persistent challenges” were impeding mining performance.

“Globally, commodity price volatility, high energy prices, geopolitical tensions and a global cost of living crisis are playing a significant role in dampening the business operating environment.

“The energy crisis, port and rail bottlenecks, are putting serious pressure on miners’ operational costs. Illicit mining, cable theft and infrastructure vandalism, place a further strain on mining output and returns.

ALSO READ: Ramaphosa says mining has transformed significantly since apartheid era

“We are committed to working hard and together to overcome these serious challenges,” he said.

Steps to address logistics and energy crunch

Ramaphosa outlined steps taken by government to address the logistics and energy crunch and these included:

• The electricity action plan to improve the performance of existing generation fleet and adding new capacity;
• The department of mineral resources and energy (DMRE) securing 1 384 MW of new generation capacity – currently in construction or already in operation;
• The DMRE releasing requests for proposals for the procurement of 5 000MW of renewable energy under bid window 7; 2 000 MW of gas-to-power; and 615 MW of battery storage.
• Working with the private sector, under the auspices of the national logistics crisis committee, to solve ports and rail challenges’ and
• Introducing competition in freight rail operations, while maintaining state ownership of the routes, “to unlock massive new investment in SA’s rail system”.

According to Minerals Council SA (MCSA) spokesperson Allan Seccombe, Eskom’s electricity supply shortfall last year reached a record, with load shedding increasing to 6 760 hours – up from 3 751 hours in 2022.

Coal producers ‘increasingly relied on road transport to move coal to harbours’

Coal producers “increasingly relied on road transport to move coal to harbours, including Maputo, which carries a cost premium” compared to rail. “Total estimated coal sales of R192.2 billion were 22% lower year-on-year,” he said.

“Total production was flat at 228.5 million tons, with Eskom the single largest user. Coal exported through the privately operated Richards Bay Coal Terminal fell to 47.9 million tons in 2023 – the lowest level since 1992.

ALSO READ: SA navigated through troubled waters with its port and rail networks − Ramaphosa

“This was a continuation of the decline since the peak of nearly 76 million tons shipped from the Richards Bay in 2017.

“Trucking is estimated to have been used to transport up to 26 million tons of coal to various ports during 2023 – the highest level of road transport in the coal sector yet,” said Seccombe Trucking, he added, was not the preferred option for exports of bulk commodities” because of the inefficiency – compared to trains”.

Trucks damaged roads, caused congestion and accidents – increasing levels of exhaust and dust pollution, severely disrupting communities on routes.

Trains ‘far more efficient’ to transport bulk commodities

MCSA chief economist Hugo Pienaar, said trains were “a far more efficient way” to transport bulk commodities.

With mining’s contribution to the fiscus having increased by R9 billion to R135.3 billion in the last financial year, MCSA CEO Mzila Mthenjane said it was “gratifying that the mining sector again delivered a crucial contribution to the SA economy…”

ALSO READ: More than 70 dead after Mali gold mine collapse