- South Africa has adopted a number of measures aimed at boosting the country’s critical mineral industry.
- In January 2023, mining production experienced its twelfth consecutive month-to-month decline, recording a decrease of 1.9 per cent.
- According to the Minister of Mineral Resources and Energy Gwede Mantashe, the industry needs to advance a commitment to working together as stakeholders on the reconstruction and recovery of the mining industry.
South Africa’s vast reserves of critical minerals present a huge opportunity for the country to accelerate economic growth and boost employment creation, while ensuring the energy transition is just and inclusive.
Statistics South Africa recently released its key findings for the fourth quarter of 2022, wherein the real Gross Domestic Product (GDP) decreased by 1.3 per cent. According to the report, the mining and quarrying industry decreased by 3.2 per cent and thus contributed -0.1 per cent to the GDP growth.
Key to the negative contribution is a decrease in economic activities for the diamond, iron ore and Platinum Group Metals (PGMs).
In January 2023, mining production experienced its twelfth consecutive month-to-month decline, recording a decrease of 1.9 per cent.
According to the Minister of Mineral Resources and Energy Gwede Mantashe, the industry needs to advance a commitment to working together as stakeholders on the reconstruction and recovery of the mining industry.
“The industry must be seen within the context of the changes and challenges facing all South Africans during these challenging times,” Mantashe said.
In this regard, the South African government has implemented a number of measures aimed at scaling-up investment, increasing exploration and production while optimising the entire mineral value chain.
Increasing mineral exploration
As part of efforts to address the decline in minerals production–with January 2023 marking the twelfth consecutive month-to-month decline–South Africa’s Department of Mineral Resources and Energy (DMRE) unveiled a large-scale exploration campaign targeting discoveries and the opening up of new mining sites in the North West, Limpopo and Northern Cape Province.
According to Mantashe, the exploration campaign forms part of efforts by the DMRE to increase the production of critical minerals essential for the energy transition.
“We are doing this because we are convinced that this is the new mining belt for our country where new mines can be opened on the back of the discovery of new minerals that have been proven to be critical for a just energy transition,” Mantashe notes.
In line with the country’s local content strategy, which aims to empower marginalised black-led and local junior mining projects, the DMRE, in partnership with the Industrial Development Corporation and the Council for Geosciences, unveiled a R500 million ($27.7 million) fund, aimed at providing funding to local and artisanal miners to conduct exploration and production activities.
The initiative is expected to increase minerals produced by small-scale mining projects. This is deliberately intended to redress the past imbalances wherein the majority of South Africans were systematically marginalised and prevented from owning the means of production, and from meaningful participation in the mainstream economy.
Digitalisation of licensing system
To improve the efficiency and transparency of the license application, grant and management processes, the DMRE seeks to digitize and modernize its mining license system. On March 24, 2023, the department issued a request for bids for the development of a customized and digital mining license platform which will enable the ministry to enhance the accuracy and accessibility of industry data, while reducing the time spent in assessing and approving mining applications.
This in turn is expected to speed up the deployment of mining projects and to increase production. Moreover, the system is expected to assist in expediting the processing of applications and thus support the efforts by the Department to address the backlog in prospecting and mining applications.
While challenges associated with South Africa’s rail network have negatively impacted the country’s mining sector and the ability for mining firms to move goods and services, a new partnership between mining industry employer organization, Minerals Council South Africa – which includes mining giants such as Anglo American, De Beers, Gold Fields and Harmony Gold – and state-owned rail and ports operator, Transnet, is set to stabilize and improve South Africa’s rail network and port infrastructure and operations, thereby strengthening mineral trade.
Ensuring secure power supply
Currently, inadequate power supply is costing the South African economy approximately R1 billion ($55.3 million) a day, and disrupting mining operations.
As such, the DMRE has adopted various measures aimed at boosting energy reliability at mining sites and across the national grid.
Through the Integrated Resource Plan 2019 and by removing the licensing threshold for independent power producers, an increasing number of mining firms are deploying power projects for security of supply.
Mining company Seriti is deploying wind and solar projects to power its Mpumalanga and Grootegeluk mining operations, respectively. Seriti operates six large-scale, opencast and underground thermal coal mines, predominately supplying Eskom power stations.
Gold Fields implemented a R715 million ($39.6 million) solar facility to power its South Deep mine near Johannesburg.
The DMRE is also procuring 513MW of energy storage capacity as part of the Battery Energy Storage Capacity Bid Window as well as new renewables capacity from independents under the Renewable Independent Power Producer program.
African minerals summit
In a bid to showcase investment and partnership opportunities within South Africa’s mineral sector, the DMRE is hosting the first-ever African Critical Minerals Summit – a platform dedicated to increasing investment and spurring development across the regional critical minerals value chain.
Organized by event producer Energy Capital and Power in partnership with the African Energy Chamber, the summit on April 14, in Sandton.
The event will take place in July 2023, uniting African policymakers and companies with global investors to discuss the future of Africa’s mining industry and the energy-mineral nexus.
Through high-level panel discussions, exclusive networking sessions and deal signings, the African Critical Minerals Summit is where the African energy transition will be accelerated.
With South Africa representing a leading producer of critical minerals – the country is the biggest producer of platinum globally, offers the highest grade of Rare Earth Elements at its Steenkampskraal mine and is responsible for 60 per cent of the world’s manganese supply, 75 per cent of platinum and 40 per cent of palladium.
The launch aims to consolidate the country’s position as a top supplier of critical minerals essential for the global energy transition, while showcasing investment prospects, driving deals signings and kickstarting a series of mineral-related developments both nationally and regionally.
As the shift to renewable energy technologies calls for the heightened production and supply of critical minerals, investing in South Africa is not only expected to speed up this transition, better equipping countries to deal with climate change and energy security challenges, but grow the African mineral market and broader economy.
