RAMAPHOSA REASSURES INVESTORS that mining challenges are being addressed

Addressing Mining Indaba 2023, President Ramaphosa expanded on the solutions to the challenges identified by Minister Gwede Mantashe of the Department of Mineral Resources and Energy (DMRE). The President’s address covered more of the details that potential investors expected to hear, and he made a firm commitment to “remove all impediments and create an environment that will drive sustained growth in mining”. The overall message was that the South African government has made strides in arresting challenges faced in mining and that it desires to work with the private sector to eradicate these challenges.

He addressed energy constraints, the acceleration of economic reforms, safety and security (which includes illegal mining and infrastructure), and the slow pace of the government’s structural reform programme.

Secure supply of electricity/decarbonisation

To realise South Africa and its mining sector’s growth objectives, the President put the achievement of a secure supply of electricity at the top of his list of four actions. We believe he is correct to prioritise electricity security in this manner because of the huge impact the electricity crisis is having on the country and, in particular, the mining sector.

The President referred to the National Action Plan to improve performance of our existing power stations: to add new generation capacity to the grid as quickly as possible and to import 100 MW more electricity capacity from neighbouring countries than the current 300 MW being imported. He referred to the success of the renewable energy IPP procurement programme and agreements for 25 new projects that will soon be proceeding to construction. He referred to the removal of the licensing threshold, enabling new generation by private power producers, and the rate at which the mining sector is generating its own electricity. The Minerals Council South Africa has said there are 89 embedded power generation projects, with a focus on renewable energy solutions, contributing to the country’s decarbonisation process.

We support these measures, especially the President’s recognition of South Africa’s abundant renewable energy resources but would recommend that the Presidency also urgently apply its mind to unblocking grid constraints. In the recently closed Round 6 of REIPPPP, only 860 MW of a targeted 5 200 MW of projects was awarded to preferred bidders because of a shortage of grid capacity. Not a single wind project was awarded preferred bidder status. We are indeed seeing large volumes of private power capacity being worked on in the country, but more can be done to unblock constraints to bringing these projects on stream in the shortest possible space of time, including a clear system for grid capacity allocations and urgent grid capacity development.

Regulatory reform

The President said government was accelerating economic reforms to improve the operating environment. This included reducing timeframes for environmental authorisations, exempting energy projects from some environmental authorisations, and speeding up the registration of new projects and grid connection approvals.

He also said government would continue to work to reduce backlogs in prospecting and mining applications, which has been a problem for the mining industry over many years. Ramaphosa said that, over the past 18 months, the backlog had been cut by 42% and he promised it would be eliminated in the “short to medium term”.

The President said the DMRE is in the process of buying an “off the shelf” cadastral system, which could be adapted to South Africa’s needs. This is an essential step to ensuring a speedy and transparent system of granting licences.

On logistics, the President referred to the partnership between Transnet and Mincosa and said opening up “key routes” to third-party operators would bring much-needed investment for upgrading, maintenance and rehabilitation.

Illegal mining/security

The President referred to the multidisciplinary Economic Infrastructure Task Teams established by the SAPS that were operating in 20 hotspots and had already made a number of arrests. Transnet has developed relationships with the industry and private security to address cable theft and vandalism on the freight rail network. Given increased safety and security threats in abandoned and operational mine sites, more consideration should be given to increasing security awareness, training, capacity-building and governance.

Making SA more attractive to investors

Ramaphosa highlighted that South Africa presents a particularly attractive destination for investors looking for opportunities in the green energy transition and the African Continental Free Trade Area.

This is an important, positive message. South Africa’s laws are considered some of the most progressive in the world, and already ensure adequate consideration of ESG (environmental, social, governance) risks, impacts and opportunities. Our Just Transition Framework was commended at COP27 and is being used as a benchmark for other developing countries to contextualise their own transition journeys. Our policy landscape is progressing as international developments drive action.

Esg

Ramaphosa said the implementation of social and labour plans (SLPs) must be improved, as “mining must be at the forefront of social development”. Basically, the President stated that if the mine has water, the community should have water. If the mine has roads, the community should have roads. If the mine has a hospital, the community should have a hospital.

There is certainly an obligation on mining companies to implement their SLPs and there is already a mechanism to monitor implementation in the SLP Regulations. When implementation is lacking, government has the means to identify and deal with the defaulting parties. International frameworks and expectations similarly require businesses to recognise and protect against adverse human rights impacts in their operations and value chains. However, it is the responsibility of the state to protect and promote basic and fundamental human rights.

The UN’s Guiding Principles on Business and Human Rights expressly acknowledge the state’s duty to protect human rights. These obligations are similarly imposed on government under our Constitution (such as the duty to provide access to sufficient food, water and healthcare services in section 27 of the Constitution).

While the social obligations of mines regarding their host communities cannot be denied, government cannot superimpose its constitutional and international obligations onto the mining sector. The interplay between these obligations, and when mining companies can and should step in, must be carefully considered and balanced.

FOR PRODUCERS, INVESTORS AND USERS OF PLATINUM GROUP METALS

PGMs Industry Day | 28 March 2023

Country Club Johannesburg, Auckland Park & online

Resources for Africa is pleased to announce its sixth annual PGMs Industry Day taking place on Tuesday 28 March 2023 in Johannesburg. Key stakeholders including PGMs producers, users and investors will take an open, honest and frank approach to tackling the key issues facing the PGMs sector in the coming years. Early confirmed speakers include:

Nico Muller, CEO, Impala Platinum

Natascha Viljoen, CEO, Anglo American Platinum

Phoevos Pouroulis, CEO, Tharisa Minerals

Bernhard Fuchs, Senior Vice President Precious Metals Management, Umicore AG

Timothy Ingle, Senior Vice President, Precious Metal Services & Recycling, BASF

Henk de Hoop, CEO, SFA Oxford

Roger Baxter, CEO, Minerals Council South Africa

And many more…

Key topics to be discussed include:

• Trends in the PGMs sector and strategies of producers

• Current geo-political and economic realities and impacts

• The role of PGMs in the energy transition and the road to net zero carbon emissions

• PGMs and the transformation of the automotive industry - combustion engines vs fuel cell EVs vs battery EVs

• Supply, demand and future projections

• Market development and applications for the future

• Investors and funders – the latest views

• Recycling, recovery and reprocessing

• Beneficiation opportunities

• The role of PGMs in the hydrogen economy

• And much more…