South African mining executives, investors and officials gather in the nation’s economic hub for the Joburg Indaba conference to discuss the industry’s investment prospects after years of regulatory uncertainty.
Overall, it’s been a good year for South African miners as the rally in iron ore, gold and platinum-group metal prices boosted earnings and put dividends back on the agenda. Still, looming labour disputes, a reliance on a weak currency and the slow demise of gold mining leave the industry with plenty of challenges.
Investors need stability
Anglo American Chief Executive Officer Mark Cutifani said there is no shortage of geological opportunities in South Africa, but to attract mining investment requires political stability and regulatory clarity. While encouraged by positive improvements in the political arena, the "parlous state" of public finances remains a challenge, according to Cutifani. The CEO said companies must work with the government to tackle "unresolved issues" in the nation’s Mining Charter, which seeks to address inequalities resulting from apartheid.
The multiplier effect of growing the mining industry – which currently supports about 4.5 million people – could drive a "wholesale economic renewal of South Africa."
Still, Cutifani cautioned that abundant and high-grade deposits won’t guarantee investment. "There are many other factors besides mineral endowment that influence where investors decide to put their money, all of which drive reassurance to investors about the security of their investment over time," he said.
Good PGM fundamentals
Anglo American Platinum CEO Chris Griffith said fundamentals for platinum-group metals will remain good for a "number of years".
The improving market has enabled producers to increase their profitable supply and has drawn greater interest in platinum stocks from international investors, he said. The company known as Amplats is studying a number of projects for its "next wave of growth," according to the CEO.
The regulatory environment in South Africa has improved, but the government needs to resolve the issue of community disruptions around mines, which is leading to huge losses for producers, Griffith said. Labour disruptions, crime and xenophobia are deterring investors, while policy differences between government and ruling African National Congress are also a concern, he said.