The findings of a recently concluded Chamber of Mines (CoM) survey indicate that if South Africa’s mining industry shifts its focus to create an attractive business environment, considerable new investment in mining would take place.
According to the report,”The current uncertain policy and regulatory environment caused by the unilateral development and release of the DMR’s Reviewed Mining Charter, the lack of finalisation of the MPRDA Amendment Bill, the inappropriate use of Section 54s, and serious allegations of corruption and state capture contributed to the malaise that has resulted in the South African mining industry placing a freeze on investment in new projects.
Chamber of Mines CEO, Roger Baxter notes that: “The findings of the survey illustrate that if the leadership focus in South Africa is shifted to creating an attractive policy, regulatory and governance environment – through ethical leadership, good governance and the adoption of competitive, stable and predictable policies – considerable new investment in mining can take place.
“This would create huge economic and transformation benefits for the country and the multiplier effects would be profound,” says CoM CEO Roger Baxter. “Not only would this result in a significant growth in annual investment, but there would be a sizable increase in jobs, export earnings, [gross domestic product] and, importantly, transformation.”
The report further indicates that real net fixed investment in South African mining projects declined in both 2015 and 2016, going against a generalised recovery in the global mining environment and major mining jurisdictions.
“South Africa is, again, losing out,” stated the report, which details the findings of an aggregated survey conducted among CoM members. The aim of the report is to gain an understanding of the investment and employment potential of the local mining industry in the event of a return to better practice in policy, legislation and regulation formulation.
Through the report, the CoM set out to determine whether the mining industry’s current lack of investment attractiveness and the contrast in rankings for different criteria by international institutions is a result of a lack of potential or a result of the negative impacts of the current policy, governance and regulatory environment.
In total, 16 member companies, representing several mining operations, responded to the survey. These companies represent a cross section of the various commodities and make up most mining production in South Africa. According to the CoM, the responses to the survey offer an indication of the impact of the current regulatory environment.
Key findings of the report indicate that the estimated amount of planned capital spending in the mining sector of R145-billion could potentially increase by R122-billion (84%) in a more stable and conducive environment.
However, the CoM pointed out that most of the currently planned investment is the capital required for operations to stay in business; while investment in new mines has halved between 2012 and 2016.
This increased investment would likely result in 48 000 new jobs being created directly in the mining industry. In terms of indirect jobs, 102 000 would be created with an uptick in investment.