Address by Mineral Resources Minister, Mosebenzi Zwane, at the 2018 Investing in African Mining Indaba:
Global economy and mining
After a period of stabilization and consolidation in 2016, the mining industry in 2017 continued to strengthen its recovery; rising commodity prices supported increased market capitalization and upward trends in key activities such as exploration, financing as well as mergers and acquisitions.
Globally, the recovery is expected to continue in the short to medium term, supporting commodity prices and demand.
We can therefore confidently assert that the spring in mining is indeed blossoming into a summer.
Recent improvements in exploration activities and expansion projects have, however, been constrained by “balance sheet conservatism” adopted as a defensive measure against the significant decreases in prices and demand between 2011 and 2015.
This lag between increase in prices, and increase in exploration activities and increases in supply, is not new to the mining business cycle, but it does represent a massive opportunity cost.
We thus wish to congratulate all investors and miners who had the foresight and fortitude to continue exploration and development programmes and who are poised to be the biggest winners in this upswing.
South African mining industry developments
After two consecutive quarters of economic contraction in the fourth quarter of 2016, and the first quarter of 2017, GDP rebounded in the second and third quarters of 2017, growing by 2,8% and 2,0% respectively.
This expansion has helped allay fears of sustained economic recession and was driven in no small part by growth in the mining sector, which grew at 8,2% and 6,6% in the second and third quarters, and 5,2% year on year.
In fact, the mining industry was responsible for no less than 20% of the growth in this period.
In the mining sector, the greatest contributors to this growth were the metals including copper, iron ore and PGMs.
Unemployment remains a concern in South Africa, and in 2017 it reached 27,7%.
While the industry did not breach the half a million mark in employment, it did register a modest net growth.
We have over R220 billion-rand worth of investments in the project pipeline, which includes PGMs, industrial minerals, energy and non-ferrous metals, demonstrating that South Africa remains a critical investment destination.
We have bountiful reserves of platinum, ferrous and non-ferrous metals, all crucial for industrialization.
Geology and mapping
Following the successful hosting of the 35th International Geological Congress in September of 2016, I announced to this audience last year an initiative to maintain the momentum of interest in the geology and exploration investment in South Africa.
The 20 billion rand, 10-year intensive mapping programme headed by our Council for Geoscience is proceeding well.
We are on track to have a multidisciplinary integrated mapping platform that constitutes all aspects of the geosciences field, whose pillars are geophysics, remote sensing, physical mapping, engineering geology, structural geology, geochemistry and seismology by 2026.
In the past year we have doubled coverage of the country at the scale of 1 to 50.000, from 5% to 10%.
At the same time, more than 40 thousand geo-chemistry samples were collected last year, whilst the high-intensity geophysics programme is also advancing well.
With the current drought conditions currently experienced in the Western Cape, it is indeed most welcome that through our entity CGS, we discovered clean drinking ground-water in Beaufort West.
This is a result of the multi-disciplinary and integrated approach to our geo-sciences mapping in the country, which is yielding results of science responding to societal issues.
We will be handing this resource over to that local municipality next week, so the community can have access to it.
A major goal of governments across the continent is the meaningful integration of the mining sector to the broader economy, with a focus on manufacturing and services.
We urge investors to work with us and to turn these policy directives into mutually beneficial programmes.
We have worked to create an enabling environment for mining-linked manufacturing in South Africa.
Our energy supply has stabilized and there is sufficient energy for new enterprises.
We have established special economic zones with the relevant infrastructure, where investors will benefit from special incentives, infrastructure and proximity to raw materials.
As host of over 80% of global reserves, South Africa has taken the lead in research and development for downstream beneficiation of PGMs principally through the Hydrogen South Africa (HySA) flagship project which is focused on developing downstream beneficiation of platinum through its use in hydrogen powered fuel cells.
We stand ready to partner with investors in this and other priority value chains including titanium, iron ore and jewellery.
The junior miners’ programme launched here last year was established to provide opportunities for new entrants identified throughout the mining value chain, as well as assist with issues of access to funding, geological information, compliance and access to markets, to diversify ownership and participation and increase investment and job creation in the sector.
The emergence of vibrant small and medium scale enterprises is vital for the future of the mining industry as a whole, they are the engines of tomorrow’s growth and will embrace the participation of women, youth and rural communities.
We will intensify our support to them in 2018, in partnership with development finance institutions and the established mining industry.
Let me take this opportunity to invite you to participate at this year’s biennial Mine Health and Safety Summit to be held in November, as this will provide for reflection and refinement of strategies and knowledge sharing towards meeting our target of achieving zero harm as an industry by 2024.
We recognize companies such as De Beers, who have gone ten years without a fatality in their operations and encourage more in the industry to achieve this milestone.
Today also marks two years since the tragic accident took place at Lily mine.
The inquiry into the accident has been concluded, and a report will be submitted to the Department in the next few weeks.
We expect all stakeholders to ensure compliance with the laws of the land, as it is in all our best interests to have an orderly development of the industry.
Working relations with companies in the sector
Through our open-door policy, we continue to prioritize the promotion of good working relations with right-holders, and we engage on a continuous basis on issues which will advance the growth and development of the sector.
Since our arrival in Cape Town a few days ago we have met with some of the global mining firms operating in our country, including Rio Tinto – on the company’s plans to expand its operations and extend its life of mine, with a potential investment to the tune of US$450 million.
The company has also demonstrated its willingness to align with government policies, by exceeding the targets we have set for empowerment and transformation.
We also received an update on the Venetia Underground Project from De Beers, an investment estimated at US$2 billion, which is extending the life of mine to beyond 2040.
Feature image credit: Mining Review Africa