Cape Town – Deputy President Cyril Ramaphosa has reinvigorated hope within the mining industry, with executives at the African Mining Indaba praising recent changes in the country steamrolled under the new ANC president's watch.
At an early morning press briefing on Monday Roger Baxter, CEO of the Chamber of Mines, which represents 90% of the industry, noted the “new sense of hope and buoyancy” which has swept over South Africa and the industry in recent weeks. Baxter said the chamber has been engaging with “key leaders” of the ANC to find a way to get the industry back on track.
Mike Fraser, president and chief operating officer of South32, acknowledged the change in the ANC’s leadership structure in his address at the indaba, saying he hopes the “healthy dose of Ramaphosa medicine” will be delivered to other parts of the economy, as it was at Eskom with the appointment of a new board.
Norman Mbazima, deputy chairperson of Anglo American South Africa, during his address spoke on the need to restore investment in the industry. He said the company was encouraged by Ramaphosa’s comments at the World Economic Forum in Davos that the impasse on the Mining Charter should be resolved urgently.
He highlighted that the sector has been struggling, citing a report from the chamber on mining investment which showed gross fixed investment in the industry has been stagnant since 2009. Investment has declined 5% over the past three years.
Net investment has fallen 57% since 2008. “Despite commodity prices improving by about 11% on average since 2006, our output as an industry has been stagnant,” said Mbazima. “We urgently need to get investment back on the agenda for South Africa.”
Mbazima said the political environment is a shaping force of the industry. He said the outcome of the ANC elections were credible, and a “significant ‘first step’ towards stabilising the political dynamics” of South Africa.
“Our view is that if the right choices are made, South Africa will regain its momentum and this will bring together all social partners; government, business, labour, and civil society; and provide a renewed sense of hope,” he said of the upcoming national elections in 2019.
He added that Anglo American would work with leaders in adopting and applying policies.
He also spoke on the negative consequences of “poor and inconsistent” regulation. “Investors require a clear, concise and consistent regulatory environment to justify investing. At present, we have anything but a conducive regulatory environment.”
Mbazima shared how the uncertainty of the Mining Charter is deterring investment. Court processes are still ongoing, and the relationship between the Department of Mineral Resources (DMR) and the industry is at “an all-time low,” he said.
“I am very hopeful that with the improvement in the political environment that we have seen since December, we can now find the ‘reset’ button and get back around the table. I cannot wait to participate in this,” said Mbazima.
He stressed that investors need to see that all stakeholders have confidence in the South African economy, democracy and institutions, otherwise they will take their money elsewhere. He also said it is important for all stakeholders - government, business and labour - to speak with an aligned voice as they did at Davos.
Peter Leon, partner at law firm Herbert Smith Freehills, also shared concerns over the regulatory environment deterring investment. “Mining is a high risk, capital intensive, long-term industry which requires regulatory certainty and predictability,” he said.
“Unless the government urgently implements measures to address the issues deterring investors, South Africa will once again fail to capitalise on any new commodities boom.
“Government needs to understand that capital is unsentimental and will go where it gets the best returns.”
During his address at the indaba, Mineral Resources Minister Mosebenzi Zwane made no mention of the charter.
Zwane said that the DMR has met with global mining firms operating in the country, including Rio Tinto, which plans to expand its operations and extend the life of its mine. This is a potential investment of $450m, he said. Zwane also referred to the Venetia Underground Project from De Beers, an investment valued at $2bn.
Zwane said the DMR would continue engaging with the investment community.
However, at an early morning briefing on Monday Baxter spoke out against the DMR leadership, calling for change as the chamber has lost confidence in Zwane’s leadership.
In turn, Zwane and the rest of the DMR leadership were well received by exhibitors at the indaba, who had taken pictures with Zwane while he visited stalls.
Zwane will address media at 14:00.
Mineral Resources Minister Mosebenzi Zwane inspects the diamond and minerals regulator stall at the 2018 Investing in African Mining Indaba February 5-8, Cape Town. (Fin24, Lameez Omarjee)
* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER