Urgent Infrastructure Action Needed to Spur Small-Miner Growth

Mining Weekly, Terence Creamer

South African miners continually complain about State-owned freight logistics group Transnet's ongoing inability to match capacity with demand, warning that there was a real risk that South Africa's poor performance during the resources upcycle ahead of the 2008 global financial crisis could recur unless infrastructure expansions were undertaken and public-private partnerships forged.

Transnet itself has stressed that its balance sheet was insufficient to support the proposed expansion and had, thus, developed a private sector participation model, which required support from its shareholder, the South African government.

Gigaba and Mineral Resources Minister Susan Shabangu had also set up a task team, led by the directors-general at the two departments, and comprising of Transnet and the Chamber of Mines, to interrogate the infrastructure needs of the mining sector.

"We must be determined not to miss the next commodity boom. It is critical that we focus on developing sufficient infrastructure to support mining," the Minster averred while imploring Transnet to expedite the expansion of the rail lines both for export and general freight business.

The fact that public investment in infrastructure development declined from about 16% of the gross domestic product in 1975 to a "paltry" 4% to 5% between 1994 and 2004, resulted in major backlogs in transport and power infrastructure.

Transnet was now seeking to raise the rail and port capacity on the iron-ore channel from Sishen to Saldanha to 60-million tons a year and to increase manganese exports to 4,2-million tons through Port Elizabeth. However, Gigaba acknowledged that logistics continued to constrain further iron-ore and manganese export growth, despite strong market demand for both products.

But he stressed that government also planned to “open access” on the constrained export line to junior and emerging miners.