Mining CEOs must be firm with Eskom and Transnet – Mantashe

Mineral Resources and Energy Minister Gwede Mantashe said businesses “cannot be a beggar” when dealing with state-owned enterprises (SOEs) but must rather assert themselves and participate in solutions. 

Mantashe made these comments during the Minerals Council of South Africa’s annual general meeting last month.

The minister admitted that the severity of load-shedding and Transnet’s inefficiencies had impacted the performance of South African miners. 

“It is not a matter of pride for us to have stockpiles of coal, manganese, and iron because our infrastructure is dysfunctional.”

However, Mantashe said South African CEOs must not bad-mouth the country as that damages the country’s reputation and scares off foreign investors. 

He also urged companies to get involved in solving the electricity and logistics crises rather than being spectators. 

Mantashe urged miners to be firm with Transnet as they are its biggest customers.

“What is important is that the industry cannot be a beggar when dealing with Transnet,” Mantashe said, “You are the biggest customer of Transnet; You are a source of revenue for them.”

“When they deal with you, you must assert yourself. They must appreciate that they are dealing with the biggest customers.” 

Rail and ports catastrophe

The Fraser Institute’s Annual Survey of Mining Companies for 2022 ranked South Africa among the bottom ten global mining jurisdictions.

The Institute also ranked South Africa 57th out of 62 countries in its Investment Attractiveness Index. In 2018, the country ranked 36, highlighting its precipitous decline.

In their latest trading updates, mining companies and their CEOs have been outspoken about the deteriorating operating environment which prevents them from investing in South Africa. 

Exxaro’s coal production decreased by 11% in 2022 “due to the poor rail performance from Transnet” and the “structural constraint of inadequate electricity supply”.

Sasol attributed its declining output to South Africa’s deteriorating infrastructure and the “structural constraint” of load-shedding.

“Persistent load-shedding, infrastructure constraints, in particular, the poor performance of the national provider of rail and port logistics services […] continue to significantly impact our business,” it said.

Sibanye-Stillwater said recently that the “increasingly supportive environment in Europe is in stark contrast to the operating environment in South Africa, which has continued to regress”.

Kumba Iron Ore had “lower throughput than expected” in 2022, with its production and sales disrupted by Transnet’s inefficient services and the prolonged strike.

Kumba has a “significant build-up of iron ore stockpiles” at their mines. Due to Transnet’s rail constraints, iron ore cannot be transported for export.

Chair of the Minerals Council Nolitha Fakude wrote a letter to the Transnet chairman Popo Molefe in December where she called for Transnet CEO Portia Derby to be fired along with the head of freight rail Sizakele Mzimela.

The Minerals Council has said it is working with Transnet to resolve logistics inefficiencies.

“This is not a crisis. This is a catastrophe,” Minerals Council CEO Roger Baxter said.