South African mining in crisis – comment by Yolanda Torrisi
The mining industry in South Africa is in crisis owing to a combination of factors and there are no signs that it can recover in the short to medium term. Most of the factors stifling the industry can be related to government policy, which have hit internal and external investment very hard.
Chamber of Mines of South Africa CEO Roger Baxter, a former speaker at the African Mining Network, told the Paydirt 2017 Africa Downunder conference in Perth this month that business confidence in the country was at its lowest levels in more than 30 years.
He said key governance and policy challenges had eroded business and investor confidence, undermining investment. These challenges coupled with policy and regulatory uncertainty had frozen new investment in the sector.
The result was that real mining GDP in 2016 of R226 billion was smaller than it was in 1994 when it was R242 billion while real mining fixed investment had shrunk over the past two years.
Another consequence was that the mining industry in South Africa made an accumulated loss of more than R30 billion in 2015. Evidence of this can be found this year with 65% of the country’s once strong platinum mining industry not being profitable.
Roger Baxter said that despite the country’s mineral potential, since 2013 the policy perception index, a report card of investment attractiveness of mining policies, had deteriorated to 84th out of 104 global jurisdictions.
Critical factors affecting the investment attractiveness were:
* Uncertainty regarding the ownership element of the mining charter.
* Uncertainty created by the DMR’s unilaterally developed and imposed reviewed mining charter (RMC17).
* Uncertainty regarding the finalisation of the MPRDA Amendment Bill which is incomplete after being published nearly five years ago (eg remaining uncertainty on s11 approvals).
* Uncertainty regarding the Minister’s proposed s49 moratorium on new right and s11 applications.
* Uncertainty created by double financial provision for environmental rehabilitation.
He said it was with all the uncertainty, the mining industry had lost confidence in the DMR and its Minister.
“The industry does not believe that the approaches adopted by the DMR are serving the national interest of the country,” he said. “In essence, there is a freeze on investment- it is extremely difficult to get an investment committee to approve any new greenfields project.
“The economic opportunity cost of the failure to get the policy, legislative, administrative and operating environment right to promote investment, growth, transformation and job creation in RSA mining is material,” he told delegates, and the DMR had provided no assistance to help the industry through the crisis.
Yolanda Torrisi is Chairperson of The African Mining Network and comments on African mining issues and the growing global interest in the continent. Contact:email@example.com
Original article http://www.africanminingnetwork.com/news/south-african-mining-in-crisis-comment-by-yolanda-torrisi/