Energy reliability, environmental impact, supply chain issues, a lack of technical skills, massive increases in demand, illegal mining activities, unreliable infrastructure, worker safety and operational security — these are some of the many issues the South African mining industry faces. They threaten the industry’s ability to capitalise on countless opportunities and realities that could drive investors to spend their money elsewhere.
Over the course of the four-day Investing in African Mining Indaba, these and many other problems were discussed at length, painting a rather bleak picture of the state of the local industry. Minister of Mineral Resources and Energy Gwede Mantashe said that load-shedding costs the South African economy as much as R1 billion per day, and President Cyril Ramaphosa noted that mineral production had contracted by 9% year-on-year in November 2022, in large part due to the energy crisis. It is estimated that infrastructure inefficiencies have resulted in a 15% decline in mineral sales.
The deterioration of Transnet’s rail and port capacity cost the mining industry R50 billion in lost opportunities in 2022 alone. The poor performance of rail cost bulk mineral exporters R35 billion in lost revenue in 2021. In 2022, coal exports through the Richards Bay Coal Terminal dropped to about 50 million tonnes — the worst performance through the terminal since 1993.
Illegal mining is out of control. In total, 1 939 serious crime incidents were recorded at Sibanye’s mining operations in South Africa in the fourth quarter of 2022. The cost of these incidents is about R41 million, and this is the situation at just one mining company’s facilities. Forty-nine deaths were recorded across the mines in 2022. While the number of fatalities is down from previous years, South Africa still ranks as the worst country in the world when it comes to mining related fatalities, and it accounts for more than half of the total number of global fatalities recorded last year. Backlogs in the application process for mining rights have stalled mining projects valued at billions of rands.
All of these challenges come at a time when the need for the minerals that will enable the renewable revolution and power the electric vehicles of the future is at an all-time high. It really is a massive opportunity as in is speculated that to supply the minerals needed to meet future demand for electric vehicles, for example, they will need 400 new mines in the next decade.
From The Shadows Emerges Knowledge