Business Leadership South Africa (BLSA) CEO Busisiwe Mavuso said yesterday that South African resource groups that have been laying off thousands of mineworkers have no option but to reduce production as a result of higher stockpiles due to port and rail challenges.
Describing the latest wave of mining industry retrenchments as “depressing,” Mavuso said stockpiles of key commodities were rising. Sibanye-Stillwater, Anglo American Platinum, Impala Platinum and ArcelorMittal South Africa were among the resource groups hardest hit by South Africa’s rail and port inefficiencies.
They have put up some operations at halt and retrenched employees from others, heralding a sharp turn for an industry battling cyclical commodity prices downturn.
“It is depressing reading of retrenchments taking place in the resources sector as commodity prices slide, but also because mining companies are unable to get output to their markets. Stockpiles have been building up because of problems with the rail and port services that Transnet provides, but they can’t grow any more,” said Mavuso.
She said the South African logistics crisis was proving to be a serious challenge for the economy. In an effort to find solutions to this, the business sector in South Africa and government were now attempting to join hands on some efforts.
Under the auspices of Through Business for South Africa, the business sector is mobilising resources to rapidly resolve the most pressing issues while supporting wider reforms to improve the functioning of the system.
The National Logistics Crisis Committee (NLCC) has also been set up as a coordinating mechanism and has been functional in the past six months. The NLCC brings together 45 private sector experts and CEOs who have experience in rail, port and road sectors.
“Five workstreams are already in place to improve operations in rail, ports, road, border crossings and security. Government is leading three workstreams focusing on policy, regulation and legislative reforms,” explained Mavuso.
This collaborative effort has resulted in “a 45% reduction in vessels anchored outside Durban port and a 36% reduction in the waiting time to anchor” for container vessels. Moreover, interventions at the Lebombo border post have resulted in an increase in vehicles processed from 1 600 to 1 900 per day.
“The short-term interventions can help reduce the negative impact, but the critical work is in resolving the long-term outlook for the sector. As we’ve learned with the electricity sector, it is only deep structural reforms that can sustainably shift the performance of the system.”
The key challenge, however, was to maintain momentum from the short-term gains. Mavuso said the appointment of new leadership at Transnet now had to be completed as the operator has been without a permanent CEO among other key positions over the past few months.
She criticised political meddling in the running of state-owned enterprises by Public Enterprises Minister Pravin Gordhan on the appointment of top executives. This, Mavuso said, rendered the boards of parastatals unable to function as they could not properly hold the executive to account.
This was "a problem seen in the Eskom context", hence, it was important that political focus be on "how to support and empower the board, and not undermine" it.
"The next major challenge is Transnet’s finances. There was some surprise at how little mention was made of Transnet in the Budget Speech last week," she added.
Treasury has provided Transnet with a R47bn guarantee, which enables it to raise new debt, "but that guarantee has been made with strict conditions, including that Transnet introduce private sector" partnerships, she said.
Gordhan under fire
In December, Gordhan failed to account to the standing committee on public enterprises over the Takatso Consortium/SAA deal and came under fire, with ‘The Star’ reporting, Renewed calls for Pravin Gordhan’s head.
The minister in October refused to resign, saying he would finish his term of office. At the time Gordhan came under fire from the Economic Freedom Fighters and the Democratic Alliance (DA) in Parliament where he was accused of collapsing state-owned entities.
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