Hidden costs of infrastructure failures ‘hamper mining industry’
Minerals Council CEO calls for reforms in energy, logistics and anti-corruption measures
The SA mining industry infrastructure problems have led to economic and social repercussions, Minerals Council CEO Mzila Mthenjane says.
The challenges facing the mining industry, including logistics bottlenecks, power supply issues, and systemic corruption, all of which are contributing to declining output and rising unemployment, Mthenjane said, calling for urgent reforms in energy, logistics and anti-corruption measures.
“The decline in recent years in mining output performance due to infrastructure constraints is a tragedy that is manifesting in undesirable employment losses,” Mthenjane said after the council’s AGM on Wednesday.
The mining sector, a cornerstone of SA’s economy, was frustrated by inefficiencies and inadequacies in critical support systems, he said.
Mining has long been a driver of economic activity and employment in SA.
According to Mthenjane, every R1m increase in mining output can generate 2.5 employment opportunities across the economy. Given that each employee typically supports three to four dependents, the ripple effect of job creation in the mining sector is profound. The mining industry employs about 480,000 people.
Mthenjane argued that with the right investments and improvements in infrastructure, the potential for job creation could be higher, offering a path out of poverty for many South Africans.
“A country where the economy is not growing and has an economic growth rate of less than 1%, while the population grows by more than 1%, means that South Africans are getting poorer.”
This disparity, he said, highlighted the need to revitalise the mining sector and address the infrastructure issues that hampered its growth.
At the heart of the crisis is state-owned logistics company Transnet, which is facing huge operational and financial difficulties. Transnet’s debt has ballooned to more than R130bn, worsened by declining capital expenditure, governance issues, and the impact of the Covid-19 pandemic.
Mthenjane said Transnet’s troubles had a cascading effect on the mining industry, limiting its ability to transport minerals efficiently.
Similarly, power supply challenges, primarily due to Eskom’s underperformance, crippled mining operations. The reliability of electricity was crucial for mining activities, and Eskom’s instability had forced many companies to invest in costly alternative energy solutions, he said.
Crime and corruption remained pervasive issues. These problems not only affected Transnet and Eskom but also eroded investor confidence and disrupted daily operations in the mining sector.
To address these challenges, Mthenjane outlined three priorities for the Minerals Council’s new executive team: improving power supply, resolving Transnet’s operational issues, and tackling crime and corruption.
“In business and government, from an electricity perspective, we’ve seen real transformation in terms of Eskom’s performance, and I believe we can achieve the same with Transnet,” Mthenjane said. He called for a continued collaborative effort between business and the government to address these issues and create a supportive policy environment.
Investing in new mining projects and expanding existing operations are essential for the industry’s revival. Mthenjane emphasised the importance of a robust cadastral system and an investor-friendly legislative environment to attract fresh investments.
He pointed out the potential for the mining sector to lead in renewable energy projects, with a pipeline of almost 15.8GW, worth R275bn, in development.
At the AGM, Exxaro CEO Nombasa Tsengwa was elected the Minerals Council’s new president, replacing Nolitha Fakude.