EDITORIAL: Mantashe under fire as mining investment dives

If you were Gwede Mantashe, minister of mineral resources & energy, you ought to have red cheeks while reading the Fraser Institute’s new annual mining investment survey. 

The report reveals that SA, once a priority mining destination, is now among the 10 least attractive destinations for mining investment. 

It’s a dismal result, which the Minerals Council SA described as “a warning that we’re headed in the wrong direction”.

Roger Baxter, the council’s CEO, said it was particularly worrying that the trajectory is downward: SA is now 75th of 84 regions, having  been 60th of 77 last year and 40th out of 76 in 2019. 

Baxter said while the council was working with Mantashe and his officials, “we are not gaining the traction or urgency we’d like to see”. 

The report is the diagnosis of a malady known for years. In 2004, SA attracted 5.4% of global mining exploration budgets, but by 2020, this was less than 1%.

It’s no secret why. Mining CEOs have repeatedly bemoaned the chaos inside Mantashe’s department — from runaway corruption involving the awarding of rights, to backlogs of more than 4,000 mining and prospecting rights applications. 

As Sibanye-Stillwater CEO Neal Froneman told the FM, the government has done “nothing to actually stimulate investment interest — I don’t think it knows how investors think”.

It’s here that President Cyril Ramaphosa’s pledge to create an “investment friendly” climate slams into the reality of his administration’s bungling. And it’s a template of bureaucratic ineptitude common to the least attractive countries. 

Zimbabwe was the worst, at 84th of 84 jurisdictions, followed by Spain and the Democratic Republic of Congo, with SA ninth worst. At the top of the list are regions that compete for mining investment with SA, notably Australia and Canada.

The question is, will Mantashe get the message? This is, after all, a man who ignored 2011 media reports about the Guptas’ influence over then-president Jacob Zuma — on the basis that “this was a racist story” by the newspapers.

The Fraser Institute report comes weeks after Mantashe’s department released its “mining exploration strategy”.

It needn’t have bothered. This “strategy” — two years in the making — runs to all of 12 pages.

It talks brashly of boosting SA’s share of global mining exploration from 1% to 5% by 2027, but it omits to say exactly how it plans to do that.

While the strategy speaks of “streamlining regulatory requirements”, including “improved turnaround time on the processing of prospecting rights”, this is left as a vague wishlist item.

The DA’s James Lorimer says the strategy is packed with anodyne reflections on the potential of the sector, rather than any workable plan. “It looks like something an intern was given to draw up over the weekend,” he says.

It’s hard to disagree, when the strategy includes bald statements such as “according to investor perceptions, SA has developed world-class legislative frameworks that govern the sector” — the opposite of what the Fraser Institute found.

At its peak, SA’s mining sector contributed 20% to SA’s GDP and employed 700,000 people. Now, it contributes 8% and employs 464,000 people. Given the country’s vast reserves, this is indisputably a story of squandered potential.