The South African mining sector is currently being plagued with negative sentiment – ‘regulatory uncertainty is driving investment away, electricity prices are too high, electricity supply is inconsistent, wages are escalating, etc., etc.’. And that is just for starters.
While I agree that these are all significant, industry-impacting difficulties which need urgent and immediate attention to secure our industry’s long-term sustainability, I also want to remind you that we shouldn’t overlook the positives – of which there are many.
Having spent a week in Zambia in May, I was reminded that South Africa has plenty ‘pluses’ to offer the mining sector. Logistics for example – there isn’t a mine in the country inaccessible by road. The country’s rail infrastructure is (largely) world-class and leads directly to our ports for export.
Africa by comparison, generally speaking, is heavily troubled by logistics, especially landlocked countries. Many projects in Africa are developed over incredibly long timeframes owing just to a lack of infrastructure. Take Sundance Resources for example, a company who has to invest in the construction of a railway line, across more than one country for over 500 km to ensure it can get its iron ore to the coast for export. This cost is substantially higher than that of a process plant required to produce the product.
A trip from Kitwe to Mufulira, Zambia – which MRA deputy editor Chantelle and I made during our stay to visit one of Glencore’s new shaft sinking projects – can take upwards of an hour although the two towns are close in proximity. This is due to intensive border controls between towns, very poor road conditions and extreme traffic congestion. South Africa does not share in these difficulties.
If you are the ‘glass half empty’ type you will point out and focus more on the negatives I mentioned above. The issue of expensive, unreliable electricity is possibly one of the largest and most contentious mining-related challenges at present. In Africa, if a mine is unable to fund and generate their own electricity from the start, then they simply cannot deliver a mine at all.
YET, Africa is a vast exploration ground with new mines emerging each year (although less often due to our global economy). Why then do we treat South Africa with a different set of rules? Although more advanced in many ways than its African neighbours, it remains a third world country with third world country challenges. Did you know Ghana has a load shedding crisis far more severe than ours? Did you know Zambia had a national blackout for two full days in April?
What about regulatory uncertainty you might ask? Amendments to the MPRDA remain unresolved. Mining Charter compliancy has created a rift between government, the Chamber of Mines and industry. True, yes, but Africa is currently fraught with governments attempting to increase taxes and royalties, amend their legislation and increase state ownership – and uncertainty around these issues is growing increasingly higher.
There is further negativity around the issuing of new licences, but honestly, is it better elsewhere? It can take upwards of 15 years to get a uranium licence in Canada for example according to GoviEx MD Daniel Major. Resource nationalism is another on-going area of debate, in South Africa, the rest of Africa and right across the globe.
We’re moving in the right direction
And while our gold industry is battling to find its way forward as depths become increasingly insurmountable, it is also helping the country’s Sibanye’s and Anglogold’s to look at and invest in new technologies that will likely revolutionise deep level mining around the world. This has in fact already started and should put South Africa on the mining technology map!
Look how far we have come as an industry with regards to safety. Statistics over the last 10 years has improved dramatically and our mines are continuously stressing their focus and intent to achieve zero-harm levels. The Mine Health and Safety Summit of 2014 was an historic event where, according to Chamber of Mines president Mike Teke, the contribution of all stakeholders was recognised in achieving an 86% improvement in safety performance during the last two decades. Acknowledgements of our great achievements should receive more focus and more praise.
Lastly, at least our mining minister is engaging, willing to explore areas of industry concern and has a ‘doors open’ approach. This alone can go a long way to putting the industry back on the right path. Unlike previous ministers, he is not in complete denial about challenges that so urgently need his attention. We just have to exercise a little patience and have faith that he is travelling the right path.
My point to all of the above is that there are challenges with regards to mining, no matter where you are in the world. The world’s harsh outlook on South Africa is exactly that, HARSH!
Perhaps you feel I am being naïve and unrealistic? Perhaps you agree with me. Either way, I would love to hear your opinion on the subject. Please email me or send me your thoughts via our social media platforms on Linked-In, Facebook and/or Twitter. I enjoy engaging debates, so let’s start one.