/ 7 February 2023

Ramaphosa vows to fix logistics constraints that have cost the mining sector R51 billion in exports

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Cyril Ramaphosa, South Africa's president, speaks on day two of the Investing in African Mining Indaba in Cape Town, South Africa, on Tuesday, May 10, 2022. Mining executives, investors and government ministers are meeting in Cape Town for the African Mining Indaba, the continents biggest gathering of one of its most vital industries. Photographer: Dwayne Senior/Bloomberg via Getty Images

President Cyril Ramaphosa said the country’s logistical challenges are a “problem” and that logistics is a critical area of reform in the mining sector. He said the country’s infrastructure inefficiencies have resulted in a 15% decline in mineral sales in 2022. 

Ramaphosa was speaking at the Investing in Africa Mining Indaba— the largest mining investment event in Africa— in Cape Town on Tuesday, where he said because of the logistical challenges by Transnet, state freight rail and ports company, in 2022 coal exports through the coal terminal in Richards Bay dropped to approximately 50 million tonnes, the worst performance since 1993. 

“This concerns us,” he said. 

Ramaphosa said he welcomes the partnership between the Minerals Council of South Africa and Transnet to stabilise and to restore operational performance of the country’s rail lines and ports. 

The state freight rail and ports company Transnet and the Minerals Council of South Africa agreed to collaborate in December 2022 aimed at stabilising and improving the movement of commodities in the country. This came after tensions between the Minerals Council and Transnet’s management made headlines after a letter by Minerals Council president Nolitha Fakude to Transnet chairperson Popo Molefe was leaked. 

In the letter, Fakude called for urgent action to arrest Transnet’s decline. Included in these interventions was the Mineral Council’s call for the removal of Transnet chief executive Portia Derby

On the first day of the four-day Mining Indaba, the Minerals Council South Africa said it was “encouraged” by recent discussions with Transnet about enduring logistics constraints. 

“The constraints around transport, logistics and border posts remain, and they are increasingly hampering mineral export volumes,” Minerals Council chief economist Henk Langenhoven said. 

The Minerals Council chief executive Roger Baxter noted that logistics constraints have cost the industry R51-billion in exports.

However Ramaphosa has promised that the reforms to improve the state of freight and rail are moving ahead and opening of strategic routes will bring much needed investment for upgrading the routes and their maintenance and rehabilitation.

He  has also promised a new policy framework for rail that will modernise the rail network to enable private investment, improve regulation and restore rail as a competitive mode of both freight and commuter transport.

“Similar efforts are underway to enable private investment in our ports and certain container corridors,” he said. 

This he said was government showing they were open to coopering with the private sector 

“But faced with this type of crisis, we have seen that it is best to work with those who have a common interest with us. So, in this case, the private sector, the workers, communities and government have a common interest to make this work.” 

He also asked that the private sector stop moaning in its critique of the railway sector. He called on all affected labour parties to get into the ring with the government and find solutions.

On load-shedding, Ramaphosa lamented the impact the crisis has had on the mining sector. He has promised that Eskom has assembled experienced technical teams to improve performance and recover capacity at power stations, with an initial focus on the six least reliable stations.

Ramaphosa also promised progress in strengthening the renewable energy programme, proudly pointing to the 25 projects representing 2 800MW of new capacity the government has signed agreements for in the last six months.

“We are facilitating investment in new generation capacity by private producers by, among other things, removing the licensing threshold for embedded generation projects.

Eskom is looking to purchase surplus power from companies with available generation capacity”. 

The president however failed to mention the ailing power stations including Medupi, Kusile, Kendal, Tutuka, Koeberg and Majuba.

Ramaphosa also spoke on the long-awaited cadastral system and he said the Department of Mineral Resources and Energy has indicated that the process for procuring an off-the-shelf cadastral system, which can be customised to South Africa’s needs, is underway.

The mining cadastre was meant to replace the department of minerals and energy’s  Samrad system for mining rights, which has been the main reason for the backlog of applications for mining rights. The Daily Maverick reported that the department only revealed in February 2021 that the backlog of applications reached over 5 000, a number it has struggled to bring down. 

The cadastral system is for managing mineral rights and would log all properties in the country and show which mining companies are permitted where and for which commodity.  

“This [cadastral system] is essential for the operation of a modern mining rights administration system, which in turn is vital for the growth of the industry. These are some of the efforts we are undertaking as South Africa to improve the business operating environment for a sector that is the lifeblood of our economy and that of the continent,” Ramaphosa said.