Mining industry 'forfeits benefits' of world boom due to Transnet, Eskom

South Africa’s mineral production hit a new record of R1.18-trillion in 2022 despite continued logistical constraints at Transnet, mining industry lobby group Minerals Council South Africa said on Monday.

The council said strong commodity prices were a tailwind for the mining industry, with 2022’s mineral production up from R1.1-trillion recorded a year earlier.

Council CEO Roger Baxter said the new production record highlights the mining industry’s continued contribution to the public purse.

“Once again, the mining industry has shot out the lights when considering its financial performance and contribution to the economy in 2022. However, we remain concerned about the worsening constraints in rail and port logistics, which means we have yet again forfeited the benefits of high commodity prices and demand, as well as inadequate electricity supply,” said Baxter.

“Transport logistics and energy are two of the most critical issues the Minerals Council is dealing with at a presidency, ministerial and Transnet board level. We are in a partnership with the Transnet board to urgently resolve bottlenecks on the four bulk mineral export channels.”

Baxter said ports and rail corridors undermined the potential of the sector, with the opportunity cost resulting from rail and port constraints climbing to R50bn in 2022 from R35bn the year before when delivered tonnages are measured against targeted tonnages.

Minerals Council chief economist Henk Langenhoven said if the rail network was operating at its full capacity, with a few minor enhancements, the country would realise R151bn more in bulk mineral sales.

“The constraints around transport, logistics and border posts remain, and they are increasingly hampering mineral export volumes,” said Langenhoven.

The council said production had declined by about 6% in 2022 compared to the previous year due to the volume of mining production falling to below pre-Covid-19 levels in 2019 because of structural constraints, leaving the industry unable to respond to higher commodity prices.

The council said taxes paid to the government had helped save the country’s fiscus from “dangerous debt metrics” worsened by the Covid-19 lockdown and economic contraction.

Highlights of 2022 include mining’s contribution growth to GDP by 4% to almost R494bn, said the council.

It said the mining industry employed 475,561 people in 2022 and paid employees R175bn in salaries, up from R166bn in 2021.

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