Ramaphosa to open up freight rail to private players

President Cyril Ramaphosa has told leading figures in African mining that the government is working hard to address the challenges that the industry faces.

These include illegal mining and electricity constraints.

He was speaking during the opening of the 30th Investing in African Mining Indaba held in Cape Town on Monday.

The Indaba is expected to continue until Thursday.

Major economic contributor

The mining industry contributes 7.5% to South Africa’s gross domestic product and accounts for about 60%, by value, of the country’s exports.

“We are all acutely aware that we face strong headwinds, and a number of persistent challenges are impeding mining performance,” Ramaphosa said.

“Globally, commodity price volatility, high energy prices, geopolitical tensions, and a global cost of living crisis are playing a significant role in dampening the business operating environment.

“Domestically, the energy crisis and port and rail bottlenecks are putting serious pressure on miners’ operational costs.
“Illicit mining, cable theft, and infrastructure vandalism place further strain on mining output and returns. We are committed to working hard and working together to overcome these serious challenges.”
Energy crisis

He told the gathering that through the energy action plan, the government has taken “several critical measures to improve the performance of our existing generation fleet and to add new electricity capacity”.

“The Department of Mineral Resources and Energy has secured 1 384MW of new generation capacity that is currently under construction or already in operation.

“The department has released requests for proposals for the procurement of 5 000MW of renewable energy under Bid Window 7, 2 000MW of gas-to-power, and 615MW of battery storage.

“Transmission capacity remains a challenge, especially in the Cape provinces. Eskom has therefore recently published a curtailment regime that unlocks 3 470MW of additional capacity in these provinces and will be essential to the success of Bid Window 7.”

Additional capacity has also been garnered following the government’s removal of the licencing threshold for embedded generation.

At least 6 300MW has flowed through this initiative, with a third of that supplying mining houses.

Illegal mining and logistics

Ramaphosa addressed the impact that illegal mining and copper cable theft has on the industry.

On illegal mining, he said: “Since the establishment of a specialised police unit, working with the defence force, we have seen a number of arrests, prosecutions, and convictions of the perpetrators of this crime.”

Turning to cable theft and criminality, the president acknowledged that this has a “serious impact on key rail freight corridors, including the supply of coal for export through Richard’s Bay”.

“Cooperation between the private sector, Transnet, and the security services has resulted in an improvement in the security situation over recent months,” he said.

Logistics nightmare

Delving deeper into the country’s logistics challenges, he said the system itself is “undergoing a process of rapid and fundamental change to improve its efficiency and position it for the future.”.

“By introducing competition in freight rail operations while maintaining state ownership of the routes, we will unlock massive new investment in South Africa’s rail system.

“This will support jobs in every sector of the economy, from mining to manufacturing to agriculture.

“Similarly, by upgrading and expanding our port terminals through innovative public-private partnerships, we aim to position South Africa as a leading player in global markets.

“As government, we are alive to the reality that without bold, transformative reforms to the logistics sector, mining cannot flourish.

“We are working hard in partnership with the industry to ensure [the freight logistics roadmap] is implemented without delay.”

The president added that mining has a “crucial role to play in building the economy of tomorrow”.

He said: “We look forward to deepening our collaboration with industry as we write a new chapter in the history of South African mining.

“A story of inclusion, growth, transformation, and innovation — and one in which no one is left behind.” – SAnews.gov.za

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