by Webber Wentzel

The keynote welcome speech by Minister of Mineral Resources and Energy, Gwede Mantashe, at Mining Indaba 2023 was a straightforward acknowledgement of some of the current issues facing the mining industry. He made positive points on embedded generation and safety.

However, the Minister did not address critical issues or set new targets. He invited investors to find solutions to problems such as load shedding, while investors were hoping to hear action plans on these issues from government. Here, the Webber Wentzel team comments on specific areas of interest:

Energy

The Minister failed to indicate how the South African government intends to tackle the country’s power shortage in the long term. Although he commented on the deregulation of embedded generation, including lifting the cap, he did not address the ongoing difficulties that mining companies are facing in obtaining other permits and accessing transmission infrastructure. He did not give direction or make pledges of support to help advance embedded generation solutions or speak to the broader issue of grid capacity. The Minister’s proposed solutions around improving the energy availability factor of Eskom’s plants, improving skills capacity at Eskom, procuring emergency power, and procuring power from neighbouring states were short on detail.

ESG

At a time when financiers and investors are more heavily scrutinising and need reassurance on issues around ESG, particularly in respect of business and human rights and responsible sourcing, the Minister missed an opportunity to highlight what developments South Africa is heeding. Improving investor confidence in mining in Africa requires addressing these softer, non-financial issues which are placed highly on funders’ agendas. The Minister did not mention key actions and developments relating to the Just Energy Transition (given South Africa’s heavy reliance on coal for energy), capacity building and skills transfer for the future, and maintaining good relationships with communities, missing the opportunity to show investors that South Africa is taking ESG issues seriously.

Safety

The minister acknowledged that the mining industry recorded in the lowest number of fatalities in a year during 2022 but also reminded that this is a milestone along the journey towards zero harm. Noting that on matters of employee health and safety, all stakeholders should be on the same proverbial side, the need to need to continue to focus on employee safety, and wellness, in the workplace must remain a priority.

Although the minister did not mention amendments to the Mine Health and Safety Act, which we anticipate will be published this year, these amendments will serve to strengthen the ability of the regulator to hold employers accountable for regulatory compliance and to ensure that reasonably practicable measures are taken to protect employee safety. We hope that the comments submitted by industry on areas of concern, or where greater consideration may be required, will be considered in efforts to reach common ground on the extent of regulation and prescription necessary. Ultimately, the minister noted that a safe mine is a productive mine – reiterating that safety should remain a key consideration of investors too.

Regulation and policy

A further omission from the minister’s address was the need to improve licensing timelines and efficiencies, related to both mining and energy, which are ongoing problems for mining companies. He did not refer to the long-delayed mining cadaster. Although he addressed the importance of the geological data available from the Council for Geosciences, it is concerning that he may be hinting at a move towards putting all geoscience data in the hands of the state to facilitate a tender system, rather than a “first come, first served” system for granting mining and exploration permits.

While the minister’s reiteration of the importance of exploration, and plan to set up a R500 million fund for emerging miners, are positive, this fund needs to be well run. Promoting exploration needs to be accompanied by an effective cadastral system and a concrete action plan on the other initiatives mentioned in the Exploration Strategy aimed at attracting investment and preventing the sterilization of minerals.

Construction

The growth of embedded generation after the removal of the cap will have positive and negative effects. While it means that mines will be directing their investment to power rather than mining, which will not grow mining output, it will have spin-off effects in creating jobs and power for the communities surrounding the mines. There will also be a local content requirement that in the longer term will help to create more domestic industrialization. This positive point was not identified by the minister.

About Webber Wentzel

Webber Wentzel is an African firm founded in South Africa more than 150 years ago. It provides in-depth legal and tax services throughout the continent. Its alliance with Linklaters and network of deep relationships with Africa's leading firms allows it to draw on the highest quality and most business-relevant pan-African advice – matching this to the needs of its clients. The firm has, over the last 50 years, been involved in some of the most transformative and significant matters on the African continent.