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President Ramaphosa raises many salient points, now let’s see a detailed action plan

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President Ramaphosa raises many salient points, now let’s see a detailed action plan

President Ramaphosa raises many salient points, now let’s see a detailed action plan

11th May 2022

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In his address to Mining Indaba, President Cyril Ramaphosa put his finger on many key issues to regenerate the SA mining industry, but the speech could have had more timelines and action plans to drive investors

Ramaphosa, delivering the keynote address at the Mining Indaba in Cape Town on Tuesday, spoke well and highlighted several important issues that the country needs to address to grow the mining industry. Several of these points were raised in Webber Wentzel’s “wish list”, published before Indaba.

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On a positive note, the president correctly:

  1. Noted the importance of mining to the South African economy.
  2. Acknowledged the significant challenges faced by the industry and that South Africa’s relegation to one of the ten least-attractive mining investment destinations in the Fraser Institute Survey underlined the importance of moving with greater speed to remove impediments to growth.
  3. Highlighted the need to fix regulatory and administrative problems, clear the backlog in applications for rights and transfers thereof, put a modern and effective cadastral system in place, improve rail and port performance, and ensure a secure and reliable supply of affordable electricity. 
  4. Showed enthusiasm about South Africa’s potential for a hydrogen economy and the launch of the hydrogen-fuelled truck at Anglo American.

Where the mark may have been missed was on the following points:

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  1. he president’s endorsement of oil and gas exploration in Africa – which would result in increased burning of fossil fuels. This does not correspond with South Africa’s commitments to help address global warming.
  2. Missing an opportunity to address ESG, and specifically the social element of ESG. We believe the focus of BEE should be less on high-level empowerment transactions and more on community schemes that deliver more direct benefits to communities in the long term.
  3. Not providing some more detail on the measures proposed to increase investment and grow South Africa's mining industry. He omitted to address the challenge of unlawful protests which disrupt mining operations. He also did not clarify exactly who would be responsible for improving the living conditions of host communities, although government is responsible for the provision of services such as education, water, infrastructure, and health services.
  4. Not fully addressing the issues of mining in a holistic context, as the mining industry is affected by the poor performance of other sectors of the economy, e.g. transport and policing. Although progress has been made, policies adopted by the DMRE sometimes conflict with policies implemented by other government departments. Co-ordination between government departments is vital for successful execution of growth-oriented policies.
  5. Not addressing the acute capacity shortages in the DMRE. Long delays in producing a cadastral system and processing applications result from both capacity and corruption issues.

Although the president’s speech more comprehensively addressed the issues facing the industry than the Minerals Minister’s speech – the president could have given more concrete action plans and timelines to try build investor confidence. Once again, at a time when the global commodity sector is cresting a wave, South Africa may miss the boat. This is particularly important as the global appetite for commodities is moving towards battery metals, with which South Africa is not particularly well endowed, other than in platinum and manganese.

While the President omitted to address certain issues (set out above), it is clear from his address that the South African government is seeking new and innovative ways to increase investment in South Africa while still progressing a just transition to a green economy.

Written by the Webber Wentzel Mining team

 

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