According to Mineral Resources and Energy Minister Gwede Mantashe, South Africa must urgently prioritize the resolution of difficulties facing freight and railway operations if the mining industry is to capitalize on the present resources boom.
Mantashe made the request on the first day of the 2023 Investing in Africa Mining Indaba in Cape Town on Monday. He informed the attendees that the mining industry had endured a difficult year in 2022.
“International and domestic factors have negatively impacted mining production and mineral sales this year,” Mantashe added.
“International factors included soaring energy prices as a result of ongoing geopolitical dynamics, while domestic factors included loadshedding and logistical bottlenecks on our railways and ports.”
According to Mantashe, the rising worldwide energy prices have significantly affected the industry’s operational expenses.
In 2022, the average price of crude oil was $100 (R193.73) a barrel. As a result, mining businesses were forced to pay expensive prices for fuel and power.
Domestically, the industry was severely impacted by the increase in power outages. According to Mantashe, this led to a reduction in mineral production across the board.
“According to estimates, loadshedding costs the economy approximately R1 billion each day. In November 2022, mining production decreased by nine percent, marking the tenth consecutive month of production decline.
This degradation manifests itself in numerous ways. You locate mines that produce and maintain stockpiles since these stockpiles cannot be transported to the ports. These are the challenges we must address.
When investors arrive, they must recognize that we face these obstacles and must overcome them.
However, he pointed to the success of Gold Fields, which boosted its production by 10% over this time period. The gold mining company, according to Mantashe, is an example of ingenuity and foresight that led to different outcomes than the rest (of the companies in the sector).
Following the modifications to schedule two of the Electricity Regulation Act, Gold Fields was able to take advantage of embedded generation reforms, according to his statement.
The statute was changed in 2022 to permit the exemption of the licensing requirement for generation projects for private use. The limit was extended from 1 megawatt to 100 megawatts and then eliminated.
This protected Gold Fields from the effects of loadshedding, allowing them to generate their own electricity and maintain and enhance production.
Mantashe stated that the existing logistical constraints on railways and ports continue to contribute to the fall in export volumes of bulk commodities, since the industry relies largely on efficient transportation.
This includes coal, iron ore, manganese, and chrome. As a result, the nation does not fully benefit from the commodity boom of these minerals.
“Transnet is now investigating ways to expedite the rehabilitation of its rail network in order to facilitate the restoration to service of locomotives and the export of bulk commodities.
“Furthermore, we applaud the development of collaborative institutions by Transnet and the Minerals Council of South Africa to ensure that all feasible steps are taken expeditiously to stabilize and enhance South Africa’s operation efficiency at the ports.
We believe that this type of collaboration between Transnet and the industry will produce results similar to those saw during the height of the Covid-19 outbreak.
According to Mantashe, “the decrease in the energy availability factor [EAF] from an estimated 75% to 49% is at the heart of the country’s current energy challenges.”
“Therefore, the most practical and rational solution to loadshedding is to reverse the decline in the EAF,” he stated.
The minister added that failure to address Eskom’s deteriorating plant performance and the resulting increase in loadshedding “is an irritant to society and has the potential to turn society against the government.”
Curbing mine deaths
According to him, the business has made considerable strides in lowering fatalities during the previous year. In 2022, there were 49 fatalities, the lowest number ever recorded. Compared to the 74 fatalities recorded in 2021, this number shows a 34% year-over-year decrease.
In the meantime, Mantashe informed the delegates that his department and the Industrial Development Corporation have established an R500 million exploration fund to assist the government in releasing junior miners and fostering the development of new mines.
The money will be supplemented with geological data to mitigate the risks associated with exploration and boost the likelihood of success.
“The initial phase of this fund’s implementation is kept deliberately small in order to demonstrate the value of geological information in accelerating progress along the exploration value chain to the pre-feasibility stage,” he explained. – SAnews.gov.za
»Problematic freight and railway operations represent a threat to the mining industry«