Mining is unlikely to grow due to soft prices and port and power challenges

Prime Minister of the Democratic Republic of the Congo (DRC) Sama Lukonde Kyenge (Left) with President Cyril Ramaphosa speaking at the Mining Indaba at the CTICC yesterday. Photo: Ayanda Ndamane / Independent Newspapers

Prime Minister of the Democratic Republic of the Congo (DRC) Sama Lukonde Kyenge (Left) with President Cyril Ramaphosa speaking at the Mining Indaba at the CTICC yesterday. Photo: Ayanda Ndamane / Independent Newspapers

Published Feb 6, 2024


The mining industry would likely only “stabilise”, rather than grow, as many commodity prices have softened and “green shoots” for a turnaround from the logistics and energy crises were only likely to translate into real change at end of this year, Minerals Council South Africa CEO Mzila Mthenjane said yesterday.

Speaking at the Mining Indaba, he said mining was going through a period of transition and there were reports of looming retrenchments, but the industry was cyclical and the industry needed to be “fit and strong” when the turnaround occurred.

For example, between 4 000 and 7 000 jobs may be on the line in the platinum metals mining sector due to softer prices and high input costs.

Mining remains critical to South Africa’s economy – last year it contributed 6.6% of gross domestic product, double the contribution of agricultural and three times that of the construction industry.

Minerals Council economist Hugo Pienaar said the sector made up 44% of all merchandise exports from South Africa last year, and as an employer of some 477 000 people, it was the only sector outside the government that had employment levels that were higher than pre-Covid levels.

He said private sector investment in mining, however, picked up last year, despite the many challenges, mostly for equipment and machinery.

But most of this went to the renewable energy space in mining, so the higher investment was driven more by investing to maintain operations, rather than to expand.

He said it was was likely to take longer than this year to fix the rail and port capacity issues, as Transnet was working on an 18-month turnaround strategy.

This was also despite the efforts of industry representative organisations such as the Minerals Council working with Transnet to try to resolve the problems.

He said the Minerals Council hoped that Transnet would be granted additional funding in the upcoming national Budget, with “reasonable conditionality” to deal with its problems.

Pienaar said the Minerals Council believed that over the next 12 to 18 months there would be an improvement in the frequency and severity of load shedding.

This was because additional power generating units at Eskom were expected to come on stream, the boom in renewable energy investment would likely continue, a new renewable energy bid window would open up, and Eskom was working to deal with transmission issues.

Contrary to many who view mining as a “sunset industry”, he said the industry output had grown well if one did not include the gold mining, “which has been in structural decline for decades”.

“One cannot talk of one mining sector, for example, annual average production in the chrome and manganese has grown 8.2% and 8.4% respectively since 1994,” he said.

Mineral Resources and Energy MInister Gwede Mantashe said there had been about R400 billion of new mining projects committed since 2018.

Speaking at the Mining Indaba, he said that for instance, some R640 million had already been invested by Nkwe Platinum for a new R13bn platinum mine,

The Mokala Manganese Mine, in Hotazel in the Northern Cape, which began construction in 2019 with an investment of R1bn, had seen 2.3 million tons of manganese produced and exported to date.

Menar had committed to invest about R7bn in coal and anthracite projects in Gauteng, Mpumalanga, and KwaZulu-Natal. Just over a week ago, it produced first coal at its new Gugulethu Mine.

Mantashe said he had asked the Department of Mineral Resources and Energy (DMRE) to eliminate the backlog in new mining licensing applications by the end of the year, and significant progress had been made.

Of about 2 000 applications received since the beginning of the financial year, the DMRE had granted 268 prospecting rights, 32 mining rights, 85 renewals, 184 amendments, and 190 permits.

Regarding the retrenchments, Sibanye-Stillwater has said that a restructuring might see it close four loss-making PGM shafts, resulting in the potential loss of 4 500 jobs,

Impala Platinum was offering voluntary job cuts to workers at its South African operations, while Anglo American Platinum has said that it was reviewing its cost structures to remain profitable.

* Read Business Report inside for more coverage of the Mining Indaba and to see what President Cyril Ramaphosa had to say.