President Cyril Ramaphosa delivered the keynote address at the Mining Indaba in Cape Town on 10 May. In the speech, the president addressed many key issues important to regenerating the South African mining industry, but the lack of timelines and action plans will be a deterrent to investors, according to the Webber Wentzel Mining team.
Several important issues were highlighted that the country needs to address to grow the mining industry, and the president correctly:
1. Noted the importance of mining to the South African economy.
2. Acknowledged the significant challenges faced by the mining industry and that South Africa’s relegation to one of the ten least attractive mining investment destinations in the Fraser Institute Survey underlined the importance of moving with greater speed to remove impediments to growth in this sector.
3. Highlighted the need to fix regulatory and administrative problems, clear the backlog in applications for rights and transfers thereof, implement a modern and effective cadastral system, improve rail and port performance, and ensure that the supply of affordable electricity is both secure and reliable.
4. Showed enthusiasm about South Africa’s potential for a hydrogen economy and the launch of the hydrogen-fuelled truck at Anglo American.
The following points, however, were identified by Webber Wentzel as cause for concern in the president’s address:
1. The president’s endorsement of oil and gas exploration in Africa, which would see an increase in the burning of fossil fuels. This does not correspond with South Africa’s commitments to help address the global warming crisis.
2. Missing an opportunity to address environmental, social and governance (ESG) issues, specifically the social element of ESG. The focus of BEE should be less on high-level empowerment transactions and more on community development which offers more direct benefits to communities in the long term.
3. More detail on the measures proposed to increase investment and grow South Africa’s mining industry should have been provided. The president omitted to address the challenge of unlawful protests which disrupt mining operations, and he also did not clarify who would be responsible for improving the living conditions of host communities, although government is responsible for the provision of services such as education, water, infrastructure and health services.
4. The issues of mining in an holistic context were not full addressed. The mining industry is affected by the poor performance of other sectors of the economy, and although progress has been made, policies adopted by the Department of Mineral Resources and Energy sometimes conflict with policies implemented by other government departments. Coordination between government departments is vital for the successful execution of growth-oriented policies.
5. The acute capacity shortages in the DMRE were not addressed. Long delays in producing a cadastral system and processing applications are the result of both capacity and corruption issues.
While the president omitted to address the issues set out above, it is clear from the speech that the South African government is seeking new and innovative ways to increase investment into South Africa while at the same time transitioning to a green economy.
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