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Initial signs that energy sector is stabilising; logistics to take longer – Minerals Council 

Image of the MCSA's Mzila Mthenjane, Nolitha Fakude and Hugo Pienaar

Mzila Mthenjane, Nolitha Fakude and Hugo Pienaar

5th February 2024

By: Irma Venter

Creamer Media Senior Deputy Editor

     

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The domestic mining industry is looking at 2024 as a year of stabilisation, rather than growth, says Minerals Council South Africa CEO Mzila Mthenjane.

The industry continues to face persistent challenges such as loadshedding, an ailing logistics sector, and a declining commodity market.

Mthenjane spoke at a Minerals Council media briefing, held on Monday morning ahead of the Investing in African Mining Indaba 2024 in Cape Town.

Council data, released on Monday, shows that the mining industry’s contribution to South Africa’s gross domestic product declined to 6.2% in 2023, down from 7.3% in 2022.

Total primary sales dropped from R883.5-billion in 2022, to R786.2-billion last year.

Overall, mining input costs in South Africa increased by 8.6% year-on-year in 2023 – well above inflation – softening from 13.8% in 2022.

Minerals Council chief economist Hugo Pienaar noted that there were some “very small, initial green shoots” visible in terms of Eskom energy supply as 2024 kicked into gear.

“Let’s hope it continues.”

Pienaar was hopeful that the next 12 to 18 months could see an improvement in both the frequency and severity of loadshedding.

He warned, however, that seeing an uptick in the logistics system would take longer.

Pienaar said the Council was seeking the rapid appointment of permanents CEOs in all Transnet executive positions, and for the permanent infrastructure manager to be announced as soon as possible.

“This will be the vehicle through which the concessioning of private sector involvement on rail is likely to be driven.

“In a very optimistic scenario this manager is probably up and running by April, May, and then the concessioning needs to start.”

Pienaar also emphasised that Transnet would need funding support from national government, and that such support should be announced in Budget 2024.

“Transnet’s turnaround plan cannot work if there are no funds from national government.”

Jobs in Jeopardy
Minerals Council president Nolitha Fakude said the mining industry was being “severely and negatively affected by the crisis in energy, logistics and crime”.

She noted that crime and corruption remained a pervasive challenge for the industry, in terms of not only personal safety for the mining sector’s employees, but also around the issue of illegal mining.

“If these three areas are not driven in a very focused manner by government, business and other stakeholders, it is going to be very difficult to stabilise the economic environment that we need to unlock job opportunities, but more importantly, protect current jobs.”

She noted that a failure to address these challenges would be “disastrous”, not only for the mining sector, but for the economy as a whole.

Fakude added that the mining industry paid R186.5-billioin in wages in 2023, up from R174.2-billion in 2022. Employment also rose slightly, to 477 000 people, up from 469 353 in 2022.

As for the rollout of a long-awaited electronic mining cadastre, Pienaar said the Council was awaiting more detail on government’s announcement last week of the preferred bidder to design and implement a functioning cadastre for South Africa.

“Timelines would be useful. At best, it would be implemented in 2025.”

Pienaar noted that the rollout of the cadastre could be a game changer for exploration spending in the country.

A minerals cadastre lists available mining or prospecting rights, properties currently under a mining or prospecting right, and the expiry of currently held rights and the ownership of these rights.

It allows companies to apply for exploration, prospecting, mining and related rights, and for the regulator to process such applications.

Looking ahead, Pienaar said an easing in global inflation could see a softening in interest rates in the second half of 2024, which could see economic conditions improve in 2025.

 

 

Edited by Creamer Media Reporter

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