Investing in African Mining Indaba 2023

Investing in African Mining Indaba 2023

By Koketso Mamabolo

What did the President and DMRE Minister share in their addresses?

President Cyril Ramaphosa concluded his address at this year’s Mining Indaba with an optimistic view of where the mining industry is and where it’s going: “As the world changes, mining is changing with it and the industry stands ready to seize the opportunities that the future presents.”

The President was one of many speakers representing different industry stakeholders at the four-day conference, held in Cape Town, which presented an opportunity for the country to engage in dialogue with the international community on the state of mining and what its future looks like. The theme for this year was “Unlocking African Mining Investment: Stability, Security and Supply”.

“Mining has been the bedrock of African economies for millenia, and it continues to play a pivotal role in development and industrialisation across the continent,” said the President in his address. It’s no wonder the summit pulled together thousands of people from across the world, who came to listen to the insights of decision-makers, learn from the experiences of industry leaders and get to understand the latest trends in mining.

Mining is leading the way in developing new technologies

The mining sector contributes almost half a million direct jobs, and just under a million indirect jobs. According to the President, the revenue generated in the sector, which produced a record high of R1.18-trillion last year, is a great contribution to the economic reconstruction and recovery of the country following the COVID-19 pandemic.

However, the President noted, there is still considerable room for growth in the industry. Addressing energy challenges will help in realising that potential. The President acknowledged this challenge and assured attendees that the government is working to overcome it.

“The fact that mineral production contracted by 9 percent year-on-year in November 2022 - largely due to electricity shortages and inefficiencies in logistics - is indicative of the challenges we need to confront and overcome.”

This challenge requires a multi-stakeholder approach, with both the private and public sector playing their part. Embedded generation projects are how the mining sector is leading the way, allowing them to meet their own electricity needs.

“According to the Minerals Council of South Africa, since the licensing threshold was lifted, approximately 89 embedded power generation projects have been developed, with a focus on renewable energy solutions like solar, wind and battery storage,” said the President. “Not only will these projects support mining operations themselves and bring down operating costs, but they will also add much-needed power to the country’s overall supply and support South Africa’s decarbonisation process.”

In his own address, the Minister of Mineral Resources and Energy, Gwede Mantashe gave an example ofhow the decline in growth can be mitigated by the mining sector generating its own electricity. He shared the success of Gold Fields, which increased production in South Africa despite the sector seeing an overall decline year-on-year in November 2022.

He said they took the opportunity presented by the amendments to Schedule 2 of the Electricity Regulation Act (ERA), which increased the threshold for generation for own use from 1 megawatt to 100 megawatts, and eventually, the government abandoned it altogether.

“This cushioned them from the impact of loadshedding as they were able to generate their own energy, and thus increased and maintained production,” the Minister said.

The change in the policies on self-generation also need to be aligned with the need for sustainability, which the mining sector is acutely aware of considering the impact their operations can have on the environment. By sourcing energy sustainably the mining sector can continue to play its part while allowing other sectors to leverage technological innovation which mining industries are bringing to the fore.

“Mining is leading the way in developing the other new technologies,” said the President.

“South Africa has abundant renewable energy sources and about 75 percent of the world’s platinum resources, which puts us in a favourite position to develop such technologies.”

Removing the threshold for generating electricity is just one of many reforms which the government is working towards in order to create a better operating environment for the mining industry.

“As part of streamlining regulatory processes, we are reducing the timeframes for environmental authorisations, exempting energy projects from environmental authorisations for certain activities, and speeding up the process of registering new projects and grid connection approvals,” said the President, before going into the logistics-related reform which the government is undertaking.

“The reforms we announced to improve the state of freight rail are moving ahead. One of these - opening key routes to third-party operators - will bring much-needed investment for upgrading, maintenance and rehabilitation.

“A new policy framework for rail sets out actions to modernise the rail network, enable private investment, improve regulation and restore rail as a competitive mode of both freight and commuter transport.”

The President noted that the government is looking to take the same approach by bringing private sector investment into the country’s ports and “certain container corridors.”

The other objectives which the President highlighted are preventing illegal mining, damage to infrastructure and improving the regulatory system.

And as Minister Gwede Mantashe noted, the sector is already repositioning itself as one of the best mining investment destinations, where more mineral deposits are being found. The message? It’s time to invest in South African mining.