South Africa’s President Admits Power Crisis Is Hurting Mining

Cape Town — 

South African President Cyril Ramaphosa says the county’s electricity crisis has severely damaged its mining industry, a key pillar of the economy. Ramaphosa made the comment while addressing Investing in African Mining Indaba, the world’s largest mining investment conference.

The Minerals Council South Africa, which represents mining companies, estimates that total mining volumes were down by 6%, or $1.8 billion last year.

In his address, Ramaphosa admitted that the ongoing power cuts implemented on 200 days in 2022 contributed to the slump.

“The electricity crisis on its own has had a huge impact on the mining industry as it has had on other industries,” he said. “Six months ago, we announced the national Energy Action Plan to improve the performance of our existing power stations and to add new generation capacity to the grid as quickly as possible.”

Ramaphosa said the fact that government is now allowing mining companies to generate their own electricity without any restrictions is going to make a huge difference.

“According to the Minerals Council of South Africa, since the licensing threshold was lifted, approximately 89 embedded projects have been developed with a focus on renewable solutions like solar, wind and battery storage,” he said. “Not only will these projects support mining operations themselves and bring down operation costs, but they will also add much needed power to the country’s overall supply and support South Africa’s decarbonization process.”

Minerals Council South Africa chief economist Henk Langenhoven said the president’s speech hit all the right notes in terms of what action is being put in place to solve the problems.

“I think the fact that load-shedding is touching every citizen and every voter is a big incentive to do something about it,” he said. “And lately we’ve seen a lot of urgency and a lot of pushing from the presidency, and our national treasury have a combined operation specifically looking at this. And they have been very, very active to try and accelerate that the actions are implemented as quickly as possible.”

Touching on the other challenges of transport and logistics, Langenhoven said coal exports which for 12 months were up nearly 150% due to demand caused by Russia’s war on Ukraine, were also down due to bottlenecks in South Africa’s rail and harbors.

In a bid to solve these issues, the council would be working with the government’s state-owned transport and logistics company, Transnet. Ramaphosa welcomed the cooperation in his speech, saying the private sector is critical.

Langenhoven said they were very encouraged to hear the president saying that an electronic management system known as cadastre would soon be implemented.

“We have been in the doldrums with that,” he said. “It’s a complete disaster, the previous system. So, it’s possible that that can be put in place in six months. It has been done in other countries, and recently in Botswana and Namibia. And that will bring us immediately into a hundred percent better efficiency. It’ll take some time to work through the backlogs, but it will be a massive, massive improvement.”

Mining analyst Peter Major of Modern Corporate Solutions also welcomed the cadastre announcement. He said the ruling African National Congress has been stalling on this.

“Because then, they can’t give all these allocations to their friends,” he said. “You know what happens — we apply for something, and we never hear back. Then in three or four months, they say, ‘Oh sorry. It turns out, somebody already has your license,’ or ‘It turns out, somebody already has the very juicy part of your license.’ It’s a breeding ground for corruption.”

The Investing in African Mining Indaba conference taking place at the Cape Town International Convention Center ends Thursday.