Report shows investors are rekindling their love for SA’s mines
SA improved in the overall ranking of mining jurisdictions, returning to levels of five years ago, according to data released by Canada’s Fraser Institute, which surveys mining companies about the attractiveness of the countries in which they invest.
On the overall investment attractiveness index SA scored 62 points, placing it 48 out of 91 jurisdictions during 2017. In 2016, SA scored its lowest points in five years at 53.6 points, placing it 74 out of 104 destinations, the worst ranking in five years.
In the underlying indices, SA fared less well.
In the policy perception index, SA ranked 81 out of 91 jurisdictions, scoring just 42.7 points, sliding steadily from the 56.9 points in 2013 when it was ranked 78 out of 112 jurisdictions.
The report confirms what South African mining companies have complained about to no avail in recent years about the deterioration of regulatory confidence and security.
In June 2017, Mineral Resources Minister Mosebenzi Zwane gazetted a Cabinet-approved Mining Charter. The third iteration of this document that sets guidelines for racial transformation of the mining sector created confusion and deep unhappiness when it was released, knocking R51bn off the capitalisation of listed miners.
The Chamber of Mines subsequently started a court process to review and set aside the charter, which Zwane suspended until the court case was decided.
However, since Cyril Ramaphosa took over as the country’s president with the removal of Jacob Zuma, under whose tenure the mining industry experienced one of its most uncertain decades, the court case has been postponed. Ramaphosa and his presidency officials have convinced the chamber to agree to talks on the charter.
Amendments to the Mineral and Petroleum Resources Development Act have been in the works since 2012 and Ramaphosa has said he expects the changes to be in force by the end of March.
One of the most damning comments in the survey backed up perceptions in an informal survey of delegates at the Joburg Mining Indaba a few years ago, where the overwhelming feeling was that the regulator, the Department of Mineral Resources was corrupt.
"The Department of Mineral Resources is corrupt and incapable of administering licences in an efficient manner. Politically connected people receive special treatment on a regular basis," said an anonymous executive director.
Looking at Africa alone, SA was the fourth-most attractive country for mining companies, ranking behind Ghana, Mali and Botswana. Kenya and Mozambique were the lowest ranked African countries.
When it came to labour regulations, labour militancy and work disruptions, SA was ranked fifth from bottom, marginally ahead of the two worst perceived countries, Panama and Venezuela.
The survey was based on the feedback from 360 respondents out of the 2,700 the survey was sent to during August and November 2017.
The Fraser Institute is a privately funded research organisation in Canada.
"The Fraser Institute’s mining survey is an informal survey that attempts to assess the perceptions of mining company executives about various optimal and sub-optimal public policies that might affect the hospitality of a jurisdiction to mining investment," it says.