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Beyond Words: A Call for Action in South Africa's Mining Sector

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Beyond Words: A Call for Action in South Africa's Mining Sector

Webber Wentzel

6th February 2024

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President Cyril Ramaphosa's recent address at the 2024 Mining Indaba resonated with many in the industry. His acknowledgement of mining's vital role in South Africa's economy, coupled with outlined efforts to address key challenges, offered a glimmer of hope. However, Webber Wentzel's mining experts believe true progress demands moving beyond words and translating plans into concrete action.

While the government's recognition of critical areas like energy security, liberalisation of the rail sector, regulatory reform and illegal mining is commendable, concerns linger. The pace of implementation remains a pressing issue, with delays serving only to increase risk and harm to the industry and its role players. Delays in finalising the cadastral system, realising energy plans and rail reform create uncertainty and hinder growth. Furthermore, the speech lacked granular details on crucial aspects like timelines, budgets, and private-sector participation models for infrastructure projects. Addressing these concerns is paramount to building trust and attracting much-needed investment.

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Bottlenecks within the sector demand more than mere acknowledgement. Initiatives to combat cable theft and improve freight logistics are welcome, but their tangible impact on current operational challenges, particularly on export, requires clearer articulation and demonstrably faster results. The human cost of the just transition cannot be understated. The President rightly mentioned it, but the roadmap needs specific plans for reskilling, social support, and community upliftment in regions like Mpumalanga. 

Beyond acknowledging challenges, Webber Wentzel proposes concrete actions for a more impactful approach:

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1.      Prioritise action over speeches: Eloquent speeches are inspiring, but concrete action speaks volumes. Translating plans into tangible initiatives with clear criteria, deliverables and performance indicators is crucial. A shift from rhetoric to results, with regular progress reports, and open communication channels to hold stakeholders accountable, is necessary.

2.      Foster deeper public-private partnerships: Public-private partnerships (PPPs) offer an effective way to expedite infrastructure development. The government should create an environment conducive to PPPs, fostering deeper collaboration with private investors and leveraging their expertise and capital, rather than preventing the realisation of benefits of PPPs to be stalled (or aborted) because of excessive red tape and unnecessary regulatory hurdles.

3.      Address regulatory inefficiencies: Streamlining processes, reducing bureaucratic hurdles, and ensuring transparency in licensing and permitting procedures are vital. Delays and red tape stifle investment and innovation. A more agile, transparent and efficient regulatory framework will unlock the sector's true potential.

4.      Prioritise community upliftment: Mining communities deserve more than just words of concern. A collaborative effort between the government, mining companies, and NGOs to invest in skills development, infrastructure projects, and sustainable livelihoods in these communities is crucial. This not only uplifts lives but also creates a more stable and secure operating environment for mining companies. The President referred with approval to various Employee Share Schemes established by employers, which ensure employee participation in employer success. However, we have, in the recent past, seen many strikes by the employees who benefit from these schemes, demanding that all available funds be paid to them without delay.

5.      Create an attractive investment climate: Fiscal incentives are essential to attract new investment. Tax breaks, streamlined regulations, and fiscal stability can make South Africa a more competitive destination for investors. This will not only create jobs but also diversify the economy and reduce reliance on traditional mining activities. It is also important to create economic opportunities, such as improved rail and port infrastructure that will allow existing tax collections to be maximised.

6.      Focus on beneficiation: Exporting raw materials generates limited value. Encouraging value addition within South Africa through incentives for processing and manufacturing, rather than simply exporting raw materials, is imperative. This will create higher-skilled jobs, boost the manufacturing sector, and contribute to a more diversified and resilient economy.

7.      Energy Reform: The removal of the licensing threshold for embedded generation and the launch of the renewables, battery storage and gas-independent power producer programmes are to be commended as examples of concrete steps having a positive impact on the mining industry. The industry would benefit from further concrete steps towards transmission and distribution grid expansion, clear grid access rules, standardisation of rules for municipal grid use and an integrated resource plan that embodies the least cost sustainable pathway to energy security in South Africa as a whole.

8.      Rail Reform: Government's formulation and approval of the National Rail Policy, the Economic Regulation of Transport Bill and the ratification of the Luxembourg Rail Protocol all should be commended. However, bold and decisive leadership is now vital to accelerate the implementation of the National Rail Policy, specifically concrete actions to liberalise the rail sector by implementing private, third-party access to the rail network, is crucial and is capable of implementation now.

In many of these instances, public and private partnerships are essential to address and implement the suggested actions (noting that PPPs, in the conventional sense, are not a prerequisite to the reforms contemplated in the National Rail Policy). The sector's true potential for inclusive growth, job creation, and sustainable development can be unlocked.

The mining industry must go beyond rhetoric and adopt real action if it is to genuinely fulfil its crucial role in constructing a more promising future for South Africa. It's imperative to put plans into action and write a new chapter in South African mining history—one that is inclusive, innovative, transformative, and growth-orientated—where no one is left behind.

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