Reuters reported that access to infrastructure will remain a significant challenge for the mining sector next year even though the government has committed resources to capital investment program aimed at the transformation of the economy.
Research by firms including Ernst & Young and Coface has found that growth in production by mining firms is often limited by inadequate infrastructure including water, power, rail and port facilities.
The Ernst & Young report said that "Export customers won't wait, and where infrastructure constraints exist, this creates a significant risk of loss in potential market share as competitors step in to fill the gap."
Due to infrastructure challenges the mining industry missed out on the last commodities boom that was driven mainly by rapid industrialization of the Chinese economy.
The electricity crisis, which led to widespread blackouts, as well as a shortage of rail and port infrastructure, has been blamed for the contraction in mining. South Africa is in danger of losing out on the current commodity price boom because of regulatory uncertainty, high input costs, and slow demand from the euro zone and calls for the nationalization of mines.
Mr Jacob Zuma President Of SA said that ZAR 300 billion infrastructure plan over seven years, which was expected to create more than 588 000 jobs.
The plan aims to improve rail, port and pipeline infrastructure and is expected to result in an increase in freight volumes, especially for iron ore, coal and manganese.
More specifically state owned logistics firm Transnet has a 5 year ZAR 110 billion capital investment plan to support growth mainly in the mining sector. The plan includes an increase in iron ore export volumes by 11% to 51.6 million tonnes. It also plans to allocate capacity to emerging mining companies.
Mr Neale Baartjes director of mineral economics and resources at consulting firm EcoPartners said that while inputs for mining production were constrained there was a monopoly on logistics.
Mr Baartjes said that "In South Africa we have a railway monopoly. This creates a disparity in what we pay for rail."
