“Mining has a crucial role to play in building the economy of tomorrow” (Ramaphosa, 5 February 2024).
Absolutely, it does, and we at Alchemy Law fully support Ramaphosa’s statement. The Investing in African Mining Indaba, held in Cape Town recently, again highlighted for us, the many hurdles the South African mining industry is facing; what is being done, and what still needs to be done to improve the industry’s performance.
Although we fully appreciate the need to strike a balance between transformation and growth, we are still faced with some fundamental and even untenable challenges. Failing infrastructure (particularly rail and port) through either neglect, poor management, or vandalism, along with slow economic reform, are just two of many considerable impediments.
Collapsed infrastructure
Just how quickly can the country’s freight corridors be turned around into a functioning, safe, and efficient logistics system?
“Currently rail networks and port infrastructure are throttling the mining and other industries, and until these have been radically and urgently overhauled, we are unlikely to see any progress,” says senior partner Wildu du Plessis.
In addition, although some crime syndicates have been identified and arrested for damage to and theft on the Transnet rail lines, particularly in the coal corridors, they are not discouraged for long. “There is an urgent need for higher levels of convictions and better prosecuting to remove these criminal elements permanently, or for at least far longer timeframes, if we want to improve mining logistics,” adds fellow senior partner Morné van der Merwe.
A new cadastral system
At the Indaba, the appointment of an identified service provider to establish a new cadastral system for mining rights administration was announced. This provided delegates with a hint of optimism that the industry – currently at rock bottom – can start trending upwards again. It is to be noted though that this new system will take between 12 and 24 months to implement, and there is concern that it could cause further backlogs in the already constrained licensing procedure. Furthermore, accurate capturing of a historically decentralised paper-based system will have its own problems, and transparency and security will need to be high on the monitoring agenda during the process.
Water – the most valuable commodity of all
Another key issue highlighted during the Indaba was water. In fact, it was identified and stated as being the most valuable commodity (rather than a specific mineral). Water reticulation needs urgent attention as it is critical to operations and hence economic worth. Tying in with the theme of water was the importance of investing in agricultural development in combination with mining due to the value and scarcity of this resource in our country.
Noise, noise, noise
From an occupational health perspective, noise-induced hearing loss (NIHL) has overtaken silicosis and tuberculosis (TB) as the biggest physical wellness threat in the industry and there needs to be a renewed focus to reduce ambient noise levels in the operations. Research is showing that although the use of personal protective equipment (PPE) such as ear muffs is mandatory for certain functions, they are seemingly not sufficient or worn properly as required, and environmental noise should therefore be targeted at source. A healthy workforce is a productive one, and hence these matters cannot be ignored.
Towards zero harm
Safety remains a key focus, as always. Presently, there is evidence of strong safety campaigns with an uptick in behavioural actions showing an improved adoption of safe behaviour and an emphasis on root cause analysis to deal with fundamental issues. There is also increasing support of many technology investments to benefit the industry going forward in order to make it a safer place to work.
Attracting investment and urging exploration
The mining industry has a crucial role to play in the development and production of minerals needed to advance clean technologies and reduce carbon emissions. But to attract investment, the government still needs to address crime and security as a whole. There is also a need for a stable and consistent regulatory environment to appeal to and retain investors and encourage exploration. The recent launch of a R400-million government fund for mining exploration, to encourage the development of new mining projects, and to entice investments was a welcomed intervention to promote prospecting so that the country can once again partake in its share of the global exploration market.
The way forward
Ultimately, sustainability within the industry and the importance of its role in developing our economy hinges on extensive and urgent stringent reform in the logistics and energy sectors. If these promises can be met on a national scale and acknowledging them as they were further unpacked during the Indaba, we too are perhaps cautiously optimistic about starting to see the beginning of an upcycle in the industry.
In recent years, the government has ramped up its efforts to address the energy situation and has adopted an ambitious strategy to give effect to the Paris Convention through the JET IP and Energy Action Plan. There has been progress too in the private sector where, “Mining houses continue to collaborate and share best practices and have made significant inroads into bypassing the electricity crisis through the adoption of private, reliable, and renewable alternatives,” reflects partner Leana Engelbrecht.
Merger and acquisition transactions in the mining landscape were slow in the first part of 2023, but this has started to pick up and investment in the energy and minerals sector is expected to surge as South Africa pushes to roll out cleaner technologies and meet energy transition goals.
There are now greater opportunities for miners to upscale and be more aggressive in their strategies, and in the past year we have seen this in the opportunities we have had to advise Southern Point Resources on their investment in Bushveld Minerals Limited as well as Impala Platinum in their securing of a controlling shareholding in Royal Bafokeng Platinum, to name a few.
Looking forward, it is our hope that through greater stakeholder engagement and partnerships, improved risk management, the tackling of these key issues, and the adoption of sound environmental, social and governance practices (ESG), the South African mining industry can be transformed and grow to indeed play a crucial part in building the economy of tomorrow.