Picture: THE TIMES
Picture: THE TIMES

Mining is expected to detract from first-quarter GDP, despite a 3.1% increase in February. But economists say an amended Mining Charter, to be released in May, should revitalise investment in the sector.

Mineral Resources Minister Gwede Mantashe said on Tuesday engagements with stakeholders about the charter had mostly been finalised and a new charter would be released at the end of May.

Statistics SA data released on Thursday showed that mining production increased 3.1% year on year in February. In the three months ended February, seasonally adjusted mining production decreased 2.4% compared with the previous three months.

The R230bn industry has been plagued by depressed prices, social unrest and policy uncertainty. It contributes 7.48% of GDP.

Relations between the mining industry and ministry deteriorated in the past year over an impasse on the charter.

"Policy and regulatory uncertainty around the Mining Charter has detracted from investment into the sector, preventing stronger growth," said Investec economist Lara Hodes.

NKC economist Elize Kruger said that the charter would give the industry greater policy certainty and should in time enhance confidence.

"Addressing the policy impasse in the mining industry is important to unlock much-needed investment in the South African mining industry."

The Chamber of Mines achieved a minor victory last week when the high court upheld its interpretation of the once empowered, always empowered principle, about which the mining body had been at loggerheads with Mantashe’s predecessor, Mosebenzi Zwane.

The court held mining companies could claim recognition for previous black economic empowerment transactions that had helped them reach the industry’s 26% ownership threshold, even if empowerment partners had subsequently sold out.

FNB senior economic analyst Jason Muscat said it was heartening to see progress made in resolving the charter impasse.

The Chamber of Mines’s chief economist, Henk Langenhoven, said investors estimated there will be 80% more investment with stabilisation of policy.

menons@businesslive.co.za

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