IDC: Critical minerals are the future. We are focused on building partnerships that respond to challenges facing the sector
By Thabiso Sekano
The advent of artificial intelligence (AI) and impact of industrial automation has decimated a significant number of industries across the globe, in the process rendering certain skill-sets redundant in the new economic order and creating opportunities for new skill-sets.
Could local mining become the next sector to face an existential threat in the wake of the global push for adoption of regulatory requirements some of which are aimed at supercharging the just energy transition? It’s a fact that local mining is a vastly transformed sector compared to the pre - 1994 era.
From how mining operations are run and measurably ensuring inclusive participation – the sector has evolved. During this period, new black-owned mining companies, including women-owned entities, have emerged, with the Industrial Development Corporation (IDC) playing a critical role in supporting the drive for inclusivity and transformation of the sector.
To support growth in the sector and create employment opportunities, we are focused on building partnerships that are responsive to the challenges facing the sector. These partnerships should also be able to share in the burden of risk for mining to return to its stellar production of yester-years. Our R37 billion exposure in mining and metals further underscores the corporation’s commitment to the sector.
Over the 30 years, unmitigated factors critical of which include rising input costs and an erratic energy supply have conspired to stifle the sector’s consistent growth and revenue momentum. The composition of the sector has also changed over the years.
In 1994, gold comprised 49% of the value of mining sales with Platinum Group Metals (PGMs) accounting for 11%. By 2023, this had reversed: gold had dropped to 14% while PGMs rose to 25%. Iron ore jumped from 3% of the basket to 13%, with coal increasing from 20% to 24%. PGMs have replaced gold as our largest mining export, at 25% of total mining exports.
The sector has shed a significant number of jobs over the past 30 years, from 611 000 in 1994 to 480 893 in 2023. Besides energy constraints, logistical challenges and the market’s growing antipathy to fossils including the adoption of new mining technologies, a few stakeholders view the push to achieve global climate targets as a threat to mining.
Yet, one could argue, as President Cyril Ramaphosa rightly outlined in his address at the recent Africa Mining Indaba, that every crisis or transition including load shedding has a silver lining.
The IDC views the Just Energy Transition as a huge opportunity for mining and industrialisation for South Africa.
For example, and owing to energy security constraints, the government announced a slew of regulatory reforms, the result of which has attracted significant private sector led investment in the energy sector.
“Since the removal of the licensing thresholds for embedded generation, the National Energy Regulator of South Africa has registered no less than 1312 generation facilities with a combined capacity of over 6 300MW. Around a third of this capacity supplies the mining load of electricity,” said the president in his reference to government’s decision in 2020 to remove prohibitions and allow private sector entities to generate any amount of electricity within their capacity.
The IDC has strategically positioned the corporation to provide funding support to companies looking to set up their own generating capacity.
Our Energy and Infrastructure Strategic Business Units are invested in huge and game-changing renewable energy and infrastructure projects spread across the country. And our exposure to renewable energy projects, most of which are spread in the Northern Cape, is in excess of R16 billion.
Focus on minerals of the future
For the record, the IDC has since 2015 to date, approved a cumulative R22.5bn for mining. Of this figure, R15.3bn went to black-empowered companies. Our objective remains to be a funder of choice for entrepreneurs looking to disrupt the status quo in the local mining landscape.
Accordingly, the corporation has developed a strategy called “IDC’s Critical Minerals Game Plan”. The strategy is premised on providing funding support to entities that are or are at least looking to mining the so-called critical minerals. The ambitious plans by many countries to deploy clean energy sources alongside clean technologies including electric vehicles (EVs) resonates with our “Critical Minerals Game Plan”.
There is increasing optimism in the mining industry that EV sales could account for more than two-thirds of market share in the US including other developed markets by 2030.
Accordingly, battery demand for mobility and stationary applications will significantly increase the demand for critical minerals.
Some of the minerals are key inputs in the manufacture of energy storage for mobile and stationary applications, just to mention a few products that we are adopting especially in the wake our country’s just energy transition.
And we have some of the minerals in abundance, spread across various regions of the country. We have abundant manganese deposits in the Northern Cape. We also have, platinum and copper, among others.
Does South Africa have all critical minerals of the future required to meet future demand? Certainly not, hence the focus on exploring opportunities in some territories spread across the continent.
The approach also bodes well as to fostering regional economic integration. We are in the Democratic Republic of Congo where our investment in a tin mining entity, called Alphamin Bisie, is bearing fruit. We are looking at several graphite projects in Tanzania. There are also some promising Lithium deposits of interest in the SADC region.
To support growth in the sector and create employment opportunities, we are focused on building partnerships that are responsive to the challenges facing the sector. The partnerships should also be able to share in the burden of risk for mining to return to its stellar production of yesteryears.
Thabiso Sekano is the head of mining and metals at the IDC. He writes in his own capacity.
BUSINESS REPORT