JOHANNESBURG (miningweekly.com) – Public Enterprises Minister Malusi Gigaba has bemoaned the breakdown in relations between South Africa’s mining industry and State-owned network industries, such a Transnet and Eskom, which, he says, resulted in the country missing out on the previous commodity boom.

Speaking in the iron-ore-rich Northern Cape town of Postmasburg at the weekend, Gigaba said that there was an “obligation” on government and the Department of Public Enterprises (DPE) to ensure “this does not recur”.

South African miners continually complain about State-owned freight logistics group Transnet’s ongoing inability to match capacity with demand, warning that there was a real risk that South Africa’s poor performance during the resources upcycle ahead of the 2008 global financial crisis could recur unless infrastructure expansions were undertaken and public-prive partnerhips forged.

Transnet itself has stressed that its balance sheet was insufficient to support the proposed expansion and had, thus, developed a private sector participation model, which required support from its shareholder, the South African government.

Gigaba and Mineral Resources Minister Susan Shabangu had also set up a task team, led by the directors-general at the two departments, and comprising of Transnet and the Chamber of Mines, to interrogate the infrastructure needs of the mining sector.

“We must be determined not to miss the next commodity boom. It is critical that we focus on developing sufficient infrastructure to support mining,” the Minster averred while imploring Transnet to expedite the expansion of the rail lines both for export and general freight business.

The fact that public investment in infrastructure development declined from about 16% of the gross domestic product in 1975 to a “paltry” 4% to 5% between 1994 and 2004, resulted in major backlogs in transport and power infrastructure.

Transnet was now seeking to raise the rail and port capacity on the iron-ore channel from Sishen to Saldanha to 60-million tons a year and to increase manganese exports to 4,2-million tons through Port Elizabeth. However, Gigaba acknowledged that logistics continued to constrain further iron-ore and manganese export growth, despite strong market demand for both products.

Transnet’s expansion strategy to increase transport and logistics infrastructure by 30-million tons over the next 10 years in the Northern Cape area, also had the potential, Gigaba said, to create 3 000 rail construction jobs and 11 000 mining construction jobs.

But he stressed that government also planned to “open access” on the constrained export line to junior and emerging miners.

“What we are committing to . . . must result in concrete action by Transnet robustly to engage with the established players to open access to junior and emerging miners.”

“The status quo is unsustainable and must consciously be changed,” Gigaba said, referring to the fact that mining in the region was still dominated by large companies such as Anglo American’s Kumba Iron Ore, as well as those associated with BHP Billiton, African Rainbow Minerals and Assore.

“We expect that when this process commences, 2 500 jobs will be created in the mines, whose potential will be unlocked by the new capacity on the rail to transport approximately one-million tons a year of small-miner products.”