JOHANNESBURG (miningweekly.com) – The mining sector could attract an additional R122-billion worth of investment if the policy perception and investment environment improved to within top quarter of the Fraser Institute’s Policy Perception Index, rather than its current position in the lower quartile, Minerals Council South Africa (MCSA) public affairs and transformation senior executive Tebello Chabana said at an African Mining Network event, on Thursday evening.
He noted that the Fraser Institute ranked South Africa twentieth out of 91 mining jurisdictions in terms of mineral potential and forty-eighth in terms of investment attractiveness, primarily because the country’s policy attractiveness was ranked eightieth.
“Out of the fifteen African mining jurisdictions included in the survey, we ranked thirteenth, just above Zimbabwe and the Democratic Republic of Congo,” he commented.
Chabana also cited a PwC report on the value distribution of the South African mining industry in 2017.
It showed that 40% of the value created went to labour, 19% to government, but only 2% to shareholders, a decline from 2011, when they received about 11%. This, “despite the fact that it is their capital that is enabling the mining activity . . . you can understand why shareholders feel like they’re not getting a good deal.”
He further noted that the country’s growth pipeline was weak, with South Africa accounting for 1% of total global exploration in 2017. In comparison, Canada accounted for 14% and the rest of the African continent accounted for 13%. Additionally, “of that 1% exploration activity, only 10% was for greenfield projects.”
However, Chabana stated that, even in the absence of greenfield investment, the country’s mining investment could almost double, if South Africa’s policy perception ranking was to significantly improve.
He explained that MCSA surveyed its members late last year, seeking to understand the industry’s potential should the policy environment improve. “Essentially, we asked, ‘If we saw a return to best practices in policy, if we were to be ranked in the top quartile for policy perception . . . how would you change your investment plans?’”
Chabana noted that South Africa’s mining capital expenditure is estimated at R145-billion over the next four years, but, based on MCSA members’ responses, this could increase by 84% – an additional R122-billion – if attractive and workable policies were implemented.
“This is just from MCSA members, never mind those waiting to invest in South Africa, waiting for the policy environment to improve.”
Further, if the industry were to attract this additional investment, it would result in the creation of 200 000 jobs, materially increase the country’s output, export and procurement activities, fund substantial infrastructure development as well as community upliftment projects, and “given the mining sector’s commitments, materially advance the country’s transformation agenda.”
He pointed out that there are “green shoots” such as President Cyril Ramaphosa’s plan to attract R100-billion in investment and efforts to root out corruption, especially at State-owned companies.
Chabana also lauded the reforms instituted by Mineral Resources Minister Gwede Mantashe, the task teams to negotiate the Mining Charter and develop the competitive strategy for the mining sector and the Minister’s decision to withdraw the Mineral and Petroleum Resources Development Act Amendment Bill.
He also applauded Mantashe’s willingness to engage with, and assist, the industry.
Chabana concluded by noting that the MCSA is looking forward to seeing these “green shoots blossoming for the benefit of the mining sector and the country.”