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SA: Gwede Mantashe: Address by Minister of Mineral Resources and Energy, Joburg Indaba, The Inanda Club, Sandton, Johannesburg (03/10/24)

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SA: Gwede Mantashe: Address by Minister of Mineral Resources and Energy, Joburg Indaba, The Inanda Club, Sandton, Johannesburg (03/10/24)

Minister of Mineral Resources and Energy Gwede Mantashe
Minister of Mineral Resources and Energy Gwede Mantashe

4th October 2024

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Chairman of the Joburg Mining Indaba, Mr Bernard Swanepoel Captains of the Industry
Distinguished Guests

This year’s Joburg Indaba has proved to be productive in a sense that delegates expressively contributed to the discussions about the “role of South Africa’s mining industry in building inclusive economic growth”.

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More encouraging to us is that, not only are the discussions and the theme of this Indaba aligned to the government’s strategic priorities of driving inclusive economic growth, job creation, and reducing poverty, but also signify the South African mining industry’s appreciation of its critical role in the realisation of these priorities.

Whereas the South African economy strengthened by 0.4% in the second quarter of 2024, the mining industry recorded a second consecutive decline mainly due to the decreased production of gold, coal, diamonds, and iron ore. Moreover, in its quarterly employment statistics released on 26 September 2024, Stats SA reported that the mining industry shed 7 000 jobs.

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In cognisant of the fact that key to sustaining the mining industry’s positive contribution to the country’s economy is an efficient transport and port infrastructure, as well as reliable and affordable electricity supply, this government continues to invest resources to eliminate the deficiencies that constrain the mining industry’s performance.

Although the rail and port infrastructure challenges remain, for which bulk commodities continue to pay a heavy price, the presentation by Transnet’s Group Chief Executive, Adv Michelle Phillips affirms the government’s commitment to working with the industry through the National Logistics Crisis Committee (NLCC) to turnaround and improve the logistics performance for the benefit of the industry.

The continued supply of uninterrupted electricity for over 6 months, with several coal-fired power stations maintaining an Energy Availability Factor (EAF) greater than 70%, is a demonstration of the government’s willingness to permanently end loadshedding, and consequently address the challenges faced by intensive electricity users, such as mining companies. The registration of facilities with a combined capacity of 569 megawatts by 23 mining companies further gives impetus to the reforms introduced by the 6th administration, which removed the licensing threshold for embedded generation.

There is a strong case emerging out of the study on “The State of Mining” that the South African mining industry not only remains the bedrock of our economy, but an attractive investment destination for mining. Coupled with the draft South Africa’s “Critical Minerals Strategy”, the study points to the reality that the South African mining industry is diversifying from the gold mining era to an industry with wide-ranging mineral resources, including the world’s largest known deposits of platinum group metals (PGMs), manganese, chrome, coal, gold, copper, vanadium, and other natural resources that are considered critical for the just transition.

Notwithstanding the challenges faced by the gold mining sector, including deep level mines and heightened safety concerns, the 2023 gold production statistics positioned South Africa as the world’s thirteenth (13th) and Africa’s fourth (4th) largest gold producer. Despite the fluctuating prices of palladium and rhodium, of which South Africa supplies 38% and 81%, respectively, to the global commodities market, the PGMs sector is poised to play a catalytic role in sustaining the South African mining industry, and in the growth of our economy.

Since South Africa became actively engaged in commercial coal mining in the late 1860s, the coal mining sector continues to produce the largest amount of coal in Africa and ranks amongst the top 10 coal-producing nations in the world. Taking into consideration, the critical role played by coal in generating baseload electricity, petrochemicals, steel, cement, and brick production, coal will continue to play an integral part in not only South Africa’s economy, but the world at large.

Considering South Africa’s reserves of known manganese and chrome deposits, as well as being the largest producer and exporter of manganese and chrome ore, the South African manganese and chrome sectors are poised to continue playing a significant role globally driven by their use in the automotive and construction industries.

As we set our sights on driving inclusive economic growth, job creation, and eradicating poverty, we must change the pit-to-port approach to mining by promoting the export of value added products, thereby reducing the export of raw and intermediate products which in turn translates to the exportation of jobs and profits. To enable this, we have started with focused engagements with various manganese and chrome producers with a view to revive the country’s mineral processing status, including revitalising smelting facilities in Rustenburg, Meyerton, Lydenburg, Richardsbay, Krugersdorp, and Machadadorp. Included in the discussions, is the need to:

ensure consistent, reliable, efficient, and affordable energy supply

deliberation on commodity linked electricity tariffs

consideration of favourable tax policies and incentives, including introducing various measures to restrict the export of non-beneficiated minerals

It is therefore essential that this industry meaningfully participate in these discussions that seek to enhance the quantity and quality of exports, promote creation of decent employment, and diversify the economy.

During the previous Joburg Indaba sessions, the sector raised with us a number of issues that we needed to resolve for the sector to thrive, including the need to ensure the necessary policy and regulatory certainty for investment. Although the South African mining industry’s regulatory framework is stable and predictable, the Department of Mineral and Petroleum Resources is drafting amendments to the Mineral and Petroleum Resources Development Act (MPRDA) to address its shortcomings and ensure that areas that have been challenged legally are strengthened against international best practice. The amendments will further improve the business environment while keeping in sync with our socioeconomic fabric.

The completion of the migration process to the new efficient and transparent mining licensing system, in June next year, is poised to modernise our licensing system, ensure regulatory certainty, and the sustainability of the South African mining industry. Having completed the first phase of the project, which included the assessment of the current environment to establish the baseline and its readiness, and the requirements with respect to system hosting, software integration, and the enhancement of cybersecurity, the development of the new system is therefore progressing very well.

To ensure that the migration to the new system is without faults, the department continues to invest resources to clean the existing data and wipe out the backlog of prospecting and mining rights applications. Contrary to a report by Daily Maverick’s Ed Stoddard which insinuates that the “DMPR is allergic to transparency”, I can report to you that between April 2023 and March this year, the department processed and finalised 127 mining rights, 1 527 prospecting rights, and 2 313 mining permits and ancillaries. Whereas we still have significant backlog in Mpumalanga, I can report that the backlog in the Northern Cape, Limpopo, the North West, Eastern Cape, and KwaZulu Natal has been reduced significantly, and that there is no backlog in the Western Cape and Free State. To ensure greater transparency, we have resolved to publish on the department’s website the quarterly reports of applications processed and finalised.

Following the establishment of the exploration fund to support junior miners in their exploration activities, reignite mineral exploration, and accelerate new mineral discoveries, we received 115 applications targeting copper, lithium, rare earth elements and graphite. Following the first phase of the verification process, we have provisionally selected 45 applications for the second phase of due diligence which will consider factors such as geographical spread, mineral diversity, and potential impact relative to investment. This rigorous assessment by the Council for Geoscience (CGS) and the Industrial Development Corporation (IDC) has highlighted several highly prospective projects, demonstrating the significant exploration potential in our country. We strongly encourage fund managers and the investor community to partner with us to access these promising opportunities, which will play a vital role in supporting junior and emerging miners in their endeavors and turn South Africa into an exploration site

In addition, the Industrial Development Corporation (IDC) is finalising contracting agreements with the 21 beneficiaries of the R72 million artisanal and small-scale miners’ fund. While this process has taken longer than we had anticipated, we are optimistic that the conclusion of this detailed process will pave the way for the disbursement of funds and consequently facilitate the implementation of the projects which will effectively help us exploit the marginal deposits.

The reality of the matter is that South Africa is blessed with a plethora of known and unknown mineral deposits which we must explore and mine to create employment opportunities, and sustain our mining industry, which junior miners will play a significant role in. It is within this context that the department is moving with as much speed and energy as possible to operationalise mines that are placed under care and maintenance at the time when our country is faced with an unemployment crisis. Whereas the department is empowered with the “use it or lose it” principle, we urge mining companies to consider the Arnot scenario of transferring the mine ownership to workers and provide technical support, as opposed to sterilising the mineral deposits by placing mines under care and maintenance.

As we come to the end of this year’s Joburg Indaba, we wish to encourage the South African mining industry to continue sharing insights about the realities of this industry, advance beneficiation at source, and support our exploration initiatives.

We further encourage junior miners to take up the opportunities presented to them in order to transform the industry and ensure that the people of South Africa derive value from their country’s mineral endowment.

I thank you.

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