Ramaphosa’s address covered more of the details that potential investors expected to hear, and he made a firm commitment to “remove all impediments and create an environment that will drive sustained growth in mining”. The overall message was that the South African government has made strides in arresting mining challenges and desires to work with the private sector to eradicate these challenges.
The president addressed energy constraints, the acceleration of economic reforms, safety, and security (including illegal mining and infrastructure) and the slow pace of the government’s structural reform programme.
To realise South Africa and its mining sector’s growth objectives, the president put the achievement of a secure supply of electricity at the top of his list of four actions. “We believe he is correct to prioritise electricity security in this manner because of the huge impact the electricity crisis is having on the country and, in particular, the mining sector,” said Jason van der Poel from Webber Wentzel.
The president referred to the National Action Plan to improve performance of South Africa’s existing power stations: to add new generation capacity to the grid as quickly as possible and to import 100MW more electricity capacity from neighbouring countries than the current 300MW being imported. He spoke about the success of the renewable energy IPP procurement programme and agreements for 25 new projects that will soon be proceeding to construction. He also referred to the removal of the licensing threshold, enabling new generation by private power producers, and the rate at which the mining sector is generating its own electricity.
“We support these measures, especially the president's recognition of South Africa’s abundant renewable energy resources but would recommend that the presidency also urgently apply its mind to unblocking grid constraints,” commented Van der Poel.
Ramaphosa said the government is accelerating economic reforms to improve the operating environment. This includes reducing timeframes for environmental authorisations, exempting energy projects from some environmental authorisations, and speeding up the registration of new projects and grid connection approvals.
Among other changes, the president said the DMRE is buying an “off the shelf” cadastral system that could be adapted to South Africa’s needs. “This is an essential step to ensuring a speedy and transparent system of granting licences,” said Van der Poel.
Ramaphosa also referred to the multi-disciplinary Economic Infrastructure Task Teams established by the SAPS that were operating in 20 hotspots and had already made a number of arrests. “Given increased safety and security threats in abandoned and operational mine sites, we believe more consideration should be given to increasing security awareness, training, capacity building and governance,” noted Pooja Dela.
An important positive message was conveyed in Ramaphosa highlighting that South Africa presents a particularly attractive destination for investors looking for opportunities in the green energy transition and the African Continental Free Trade Area.
“South Africa’s laws are considered some of the most progressive in the world, and already ensure adequate consideration of E, S and G risks, impacts and opportunities,” said Paula-Ann Novotny. “Our Just Transition Framework was commended at COP27 and is being used as a benchmark for other developing countries to contextualise their own transition journeys. Our policy landscape is progressing as international developments drive action.”
Ramaphosa also spoke about the necessity to improve the implementation of Social and Labour Plans, as “mining must be at the forefront of social development”.
“Basically, the president stated that if the mine has water, the community should have water. If the mine has roads, the community should have roads. If the mine has a hospital, the community should have a hospital,” Dela explained.
“While we agree that there is certainly an obligation on mining companies to implement their SLPs, there is already a mechanism to monitor implementation in the SLP Regulations. International frameworks and expectations similarly require businesses to recognise and protect against adverse human rights impacts in their operations and value chains,” Dela clarified.
“However, it is the responsibility of the State to protect and promote basic and fundamental human rights. These obligations are similarly imposed on government under our Constitution (such as the duty to provide access to sufficient food, water and healthcare services in section 27 of the Constitution). While the social obligations of mines vis-à-vis their host communities cannot be gainsaid, the government cannot superimpose its constitutional and international obligations onto the mining sector.”
After the president’s address at Mining Indaba, the president, in his State of the Nation Address, announced that South Africa's energy crisis “and its impact” had been declared a State of Disaster in terms of the Disaster Management Act, 2002. For more about this declared state of disaster and its possible impact read Webber Wentzel’s update here.
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