The 2016 SONA (State of the Nation) address delivered by South African president Jacob Zuma last week delivered a disappointing message for the local mining sector – one which provided no relief or answers for its multiple challenges.
Zuma was quick to acknowledge the economic difficulties currently affecting the country, including the low prices of gold, platinum, coal and other minerals.
Despite the impact prices continue to have on the sector and its increasing inability to remain economically viable in many instances, the president noted only how the mining sector needs to focus on job retention.
“We appeal to businesses again that retrenchments should not be the first resort when they face difficulties,” – Zuma
This indeed is a valid point, but without incentive or motivation or encouragement or assistance on ‘keeping the lights’ on during this period.
He also acknowledged his understanding for resolution on the amended MPRDA, and and further pointed out during his speech:
“We have heard the appeals for policy certainty in the mining sector, especially with regards to the Mineral and Petroleum Resources Development Bill. It was referred back to Parliament last year. We await Parliament to conclude the processing, which we trust will be done expeditiously.”
This situation remains open-ended and has been a contentious issue for years. He provided no clarity on timing to finalise this industry-critical issue.
Electricity and IPP coal status update
In 2016, government will select the preferred bidders for the coal independent power producers (IPP). Request for proposals will also be issued for the first windows of gas to power bids.
South Africa’s plan to introduce 9 600 MW of nuclear energy in the next decade remains a priority – this in addition to running the Koeberg nuclear power plant.
“We will test the market to ascertain the true cost of building modern nuclear plants and will only procure nuclear on a scale and pace that our country can afford,” Zuma emphasized.
“We have made significant progress in the implementation of the plan.”
Zuma noted the progress that has been made to stabilise the electricity supply, adding that no load shedding has occurred since August last year.
Government has invested R83 billion in Eskom, which has enabled the utility to continue investing in Medupi and Kusile, while continuing with a diligent maintenance programme.
Economic growth and deteriorating economic status
The International Monetary Fund and the World Bank predict that the South African economy will grow by less than 1% this year.
“Importantly, our country seems to be at risk of losing its investment grade status from ratings agencies. If that happens, it will become more expensive for us to borrow money from abroad to finance our programmes of building a better life for all, especially the poor.”
“The situation requires an effective turnaround plan from us. It is about doing things differently and also acting on what may not have been acted upon quickly before.”
Zuma’s ability to highlight South Africa’s growing challenges was only a starting point, providing answers to these is what the country is looking for, and is still waiting for.