Cape Town – The mining industry is in a crisis and mining firms have lost confidence in Mineral Resources Minister Mosebenzi Zwane.
That is according to Chamber of Mines CEO Roger Baxter in a speech he delivered at the Africa DownUnder Conference in Perth, Australia, on Friday. The chamber represents 90% of South Africa’s mining companies, including Anglo American.
Baxter said it was concerning that Zwane paid “scant attention to this crisis in his conference presentation yesterday, but that perhaps this is because the Department of Mineral Resources (DMR) has provided no assistance to help the industry through the crisis”.
The conference, now in its 15th year, is the largest African mining-focused event outside the continent itself and attracts mining executives from across the globe.
Baxter said the industry is surprised that Zwane claims to have received positive feedback from any investor on the Mining Charter, or the state of the industry.
“This has not been the industry’s experience, and it is the industry that engages with investors and raise capital on a regular basis.
“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 South African mining is material.”
Baxter said the chamber and its members have lost confidence in Zwane. “Significant corruption allegations against the minister and the DMR have not been cleared and the proposed judicial commission of enquiry into state capture has not been established,” he said.
“The industry does not believe that the approach adopted by the DMR is serving the national interest of the country and the negative impacts of the unilaterally imposed Reviewed Mining Charter, the proposed Section 49 rights moratorium, the non-resolution of the charter ownership issues, imposition of inappropriate Section 54 safety stoppages, for example, have created a major crisis for the sector. The industry is of the firm view that the DMR’s charter is designed to benefit a select few at the expense of the whole country.”
Investor confidence has been eroded
Baxter said key governance and policy challenges in South Africa have eroded business and investor confidence. He pointed out that South Africa is now ranked a "dismal" 13th in Africa in terms of its investment attractiveness index, saying it should be in the top three.
“Policy and regulatory uncertainty have frozen new investment in the sector,” he said. “It is extremely difficult to get any company investment committee to approve any new greenfields project in South Africa today.
“Real mining GDP in 2016 of R226bn was less than the R242bn reported in 1994. Real mining fixed investment has shrunk over the past two years, with large parts of the industry continuing to report losses.”
Baxter said that to get mining back on track, policy and regulatory certainty is required, and government oversight is required that recognises mining’s unique characteristics.
“To encourage investment into mining, policies need to recognise the characteristics of mining and help reduce the risks of investment in long term projects. The chamber remains committed to finding workable solutions in the national interest.
“This is a resilient industry. Its stakeholders – including business, government, unions, communities and civil society– have reached a precipice in the past, but then realised that mutually agreeable solutions are possible. But, this will require ethical leadership and a focus on the national interest by all parties.”
Zwane told the conference on Thursday that the Mineral and Petroleum Resources Development Act, which was passed by Parliament three years ago but returned to Parliament by President Jacob Zuma in 2015, would be promulgated by December, Reuters reported.
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