The government is to send a delegation to the Strait of Hormuz to learn why this narrow waterway now under the control of Iran is destabilising global energy supply chains, mineral and petroleum resources minister Gwede Mantashe said on Tuesday.
The Iranian government is preventing the passage of oil tankers and other ships through the strait while negotiations with the US proceed over a solution to the war, which has seen the US and Israel bomb Iranian infrastructure and Iran bomb facilities in Middle Eastern countries.
The restriction on the transport of oil has resulted in sharp spikes in the oil price.
Introducing his budget vote speech in the National Assembly, Mantashe said, “We have undertaken to visit the Strait of Hormuz to see what is magic about this strait, this small passage of oil, that destabilises the world.”
Enough petrol
Mantashe gave the assurance that while global fuel supply challenges persisted, South Africa had sufficient fuel supplies for the foreseeable future.
“There is not going to be any shortage of petroleum products in the country, not in the foreseeable future. We have secured our supply. It may be expensive but you will get oil and diesel every time you go to the petrol station,” he said.
The minister stressed that the relief provided to consumers by the three-month reduction in the fuel levy at the cost to the fiscus of R17.2bn, which comes to an end in June, was a temporary solution, not a permanent one.
“The reality confronting us is that South Africa remains overly dependent on imported refined petroleum products, and that is a call on us to develop an upstream petroleum industry and expand our refining capacity. That is the solution. Our refining capacity can only give us 40% of our needs and we need to explore oil and gas on our own shores,” Mantashe said.
“It is neither sustainable nor just for a country with significant mineral and petroleum potential, such as ours, to remain exposed to external supply shocks in this manner. This is precisely why our sustained focus on developing the upstream petroleum industry and expanding our refining capacity remains correct, despite persistent pressure from certain environmental lobby groups.”
Mantashe stressed the importance of urgently processing the South African National Petroleum Company Bill, presently in parliament. The company will be a state-owned entity to enable state participation in the oil and gas sectors, as envisioned in the Upstream Petroleum Resources Development Act (UPRDA).
Problematic electricity prices
Dealing with the mining industry, Mantashe was emphatic that South Africa would not be able to develop its beneficiation capacity until the problem of the high price of electricity was resolved. Rising electricity tariffs were putting severe operational pressure on mining companies. particularly in the ferroalloy industry.
Mantashe said the critical minerals and metals strategy was being implemented.
“A key pillar of the strategy is geoscience mapping and exploration. Through the Council for Geoscience (CGS), the government continues to invest in high-resolution geoscientific data aimed at derisking exploration and attracting investment.
“The CGS has increased national onshore mapping coverage from below 5% in 2019 to a cumulative 20% in the 2025/26 financial year. The CGS will continue scaling this flagship programme across both onshore and offshore domains.
The Junior Mining Exploration Fund (JMEF), capitalised at R400m by the department and the Industrial Development Corporation (IDC), had already funded 13 projects — Anglo American being the first to pledge R600m into the fund, taking the fund size to R1bn.
It is clear: we can either have a growing industry or we can continue with BEE.
— James Lorimer, DA mining spokesperson
The Public Investment Corporation (PIC) had made R1.35bn available for exploration activities. It will function as a continuation fund providing a seamless transition for the project pipeline emerging from the JMEF.
DA mining spokesperson James Lorimer highlighted the extent of the decline of the mining industry since 1994, with far fewer people employed, lower production volumes and a lower share of GDP. He noted that 20 years ago South Africa attracted nearly 5% of world expenditure on mineral exploration. Now it was less than 1%.
“The Bureau for Economic Research says the decline in the mining industry has been caused largely by policy and regulatory constraint rather than by geological exhaustion.
“The bureau singles out persistent uncertainty regarding BEE targets. It says the uncertainty caused by the successive versions of the Mining Charter has been replaced by anxiety over the Mineral Resources Development Bill.
“On top of that, there’s a fear that any investment could be expropriated without compensation. Why invest in any big project in South Africa when the ANC has given itself the legislative space to seize it?” Lorimer asked. He referred to findings of the Fraser Institute, which now regularly puts South Africa in the bottom 10 in its desirability index for investment because of the country’s mining policy.
“When 30% of any project has to be handed over to BEE owners before it even begins, that amounts to a tax on capital. Make something more expensive — and you get less of it. We have less capital available to grow the industry. It is clear: we can either have a growing industry or we can continue with BEE.”
In concluding the debate, Mantashe strongly defended the value of BEE in the mining industry, reaffirming the views expressed by President Cyril Ramaphosa in reply to questions in the National Assembly last week.
The Solidarity Research Institute released a report on Tuesday in which it said the mining industry had shrunk “as a direct result of poor mining policy, including transformation policies such as BEE”.
Business Day
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