Perceptions of risk raise hurdles to mining investment
Regulatory uncertainty means the death of low-return projects, while Eskom woes and Mining Charter add to wariness
Increased country risk and regulatory uncertainty in SA have changed the way some mining investors look at the country, holding back spending on projects that don’t deliver returns under higher investment hurdle rates.
The hurdle rate, or return on capital invested, increases as a risk premium is factored in. Essentially, investors want a big return on their money if projects are considered risky.