For nine years Govt. didn’t listen to industry. Now it hasn’t a choice

Roger Baxter, in-coming chair, Southern Palladium Pic: Martin Rhodes

Life is full of ironies. For Roger Baxter, one is that he bid adieu to his beloved Minerals Council just as government bowed to energy diversity. As a fresh-faced 32-year-old economist, he was part of the Nedlac team negotiating the 1998 Energy White Paper which had, among its goals, ‘security supply through diversity’. “It’s only taken 25 years,” he says.

In an interview with Miningmx a few weeks before leaving the Minerals Council for good, Baxter repeatedly referenced the self-inflicted loss in public sector capacity. “If I could just be blunt, these days the simple fact is government doesn’t have the capacity to run these assets like they could 20 years ago. It’s as simple as that.” It’s for this reason the private sector is now participating more directly in state-owned companies, starting with Eskom and, more recently, Transnet.

In South Africa, this process is a painful one. Globally, however, command economies – such as those desired by the ANC – are the exception. “If you want South Africa to be a modern, industrialised economy you have to adopt the models adopted everywhere else in the world, among all our major competitors – which is greater levels of private participation. We don’t call it privatisation. This is about private concessioning.”

And so it is that the unbundling of Eskom’s transmission division will see it concession its infrastructure to the growing body of independent power producers (IPPs).

Similarly, plans are afoot for Transnet to sell its bulk mineral rail routes on a pay-per-use basis. But the environment is polarised ideologically. To Baxter’s point on privatisation specifically, the South African Transport and Allied Workers Union interpreted Transnet’s collaboration with the Minerals Council as a coup d’etat.

This was after Transnet agreed to work with the Minerals Council on improving bulk mineral efficiencies. The trigger for this was a controversial council letter in December calling for the resignation of Transnet CEO Portia Derby and her CEO at Transnet Freight Rail, Sizakele Mzimela. Baxter described it as “a bit of a blow-up” and acknowledged it initially hindered progress: “Yes, there were some clashes at a leadership level at the end of last year and early 2023. We’ve kind of buried the hatchet on the different issues.”

Securing pragmatic cooperative agreements with government is just part of the challenge. Once agreed, and assuming there is genuine buy-in from all parties, technical challenges abound. Eskom’s transmission is capacitised for Gauteng to Northern Cape, not the reverse, as now required by the predominantly solar-powered IPPs operating in the Northern Cape. Similarly, there’s been a 20-million-ton deterioration in capacity on the Mpumalanga to Richards Bay coal line.

Says Baxter: “We’ve got the balance sheets, we’ve got the capability, we can significantly increase the amount of traffic that’s on the rail networks through private concessioning of some of the major lines. It again comes back to public policy choice. If the ANC-led government wants to remain in control of those assets, that’s their call, but it will result in consequences.”

So, what of 2024?

Baxter thinks South Africans ought to reconcile themselves to coalition politics, which will present difficulties quite unlike today’s politics. Despite this, he thinks government capability has deteriorated so profoundly that regardless of the future administration, it will have no choice but to embrace private-sector money and technical and intellectual capacity. “Where South Africa is at the moment requires an all-hands-on-deck, partnership approach,” he says.