The 2018 Fraser Institute annual survey of mining companies — now in its 21st year — is a strong indicator that the government’s commitment and efforts over the past 12 months to bring about policy certainty and attract much-needed investment to the economy are beginning to bear fruit.

In 2017 the institute intimated that SA was unattractive due to regulatory and policy uncertainty, when it could have been among the top countries in the world.

Since assuming power President Cyril Ramaphosa has emphasised economic growth with a specific focus on policy certainty, especially in those sectors that would boost economic growth.

Uppermost for the mineral resources ministry, therefore, with mining integral to economic growth and development, was regulatory and policy certainty in the industry. The regulatory framework governing the sector must be clear and uncontested and must not create doubt among roleplayers.

The Mining Charter arose and was concluded with this worldview in mind. Issues pertaining to the Mineral and Petroleum Resources Development Amendment Bill had to be addressed due to its adverse effect on the sector, including delaying the potential development of the petroleum sector. Hence the focus on formulating the legislative framework to separate petroleum from mining.

The aim was to unlock the untapped potential of the petroleum sector for the economy and enable it to thrive. These developments, on their own and taken together, elicited support from all stakeholders, including some opposition parties.

These efforts account for our improved standing in the 2018 Fraser Institute ratings. In terms of perceptions on mining policy attractiveness, SA now ranks 56 out of 83 mining jurisdictions, compared with 81 out of 91 in 2017. This is an improvement of 25 spots.

What motivates the multipronged policy intervention strategy is the intention to ensure that competitiveness in the mining sector is improved. In addition, it is to enable the sector to contribute to the growth stimulus.

Among the key factors that should be form part of this partnership is the ability to communicate a common, positive message

SA continues to adopt a policy path that is propitious to long-term investment. This despite the challenges the government and all the stakeholders in mining are yet to overcome.

The past 12 months have seen a return to some of the best practices in mining policy. This is borne testimony to in the improved ranking. The intention is to consolidate these improvements as we progress.

On investment attractiveness perceptions, SA improved its ranking by five spots from 48 out of 91 in 2017 to 43 out of 83 in 2018.  A higher attractiveness of the mining industry will always have a positive impact on the economy. It has the potential to increase the GDP contribution of mining to at least 10%.

The mining industry’s own projections suggest this type of improvement in policy and investment attractiveness, if it is sustained and continuously improved, has the potential to attract an additional R122bn worth of investments over the next five years.

Some of the mining companies — for example, De Beers — are showing their support for what they see as an attractive environment for investment. The company revived its exploration and prospecting projects, which it had withheld over the years because it considered the conditions unfavourable.

The attractiveness of the country for investment reflects the positive mood and developments that prevailed over the past year, even as the country seeks to grapple with the hard choices it must make to return to a solid path.

Therefore, the buoyancy in the national context, coupled with the specific interventions at government level, give cause to investment prospects.

Buoyed by these developments, French energy giant Total, which abandoned drilling in 2014, had the confidence to invest in a new and stable drill rig to explore offshore oil and gas off the Western Cape coast. Total announced a significant find of a 57m deep well of gas condensate at 3,633m depth, which could yield up to 1-billion barrels of gas. According to most optimistic estimates, this discovery could yield about $1-trillion for Total and at the same time bring revenue to the fiscus. This  will further bolster the economy through strengthening our volatile currency, boost businesses and create jobs.

The social partners in mining also continue to contribute towards improving the attractiveness of SA, as a mining investment destination in particular. During the 2019 Mining Indaba, the Mining Leadership Forum comprising the government, labour and industry signed a mining leadership compact. The compact is a demonstration of the forum’s determination to pursue a vision of building a competitively growing mining industry defined by ethics, decency and integrity.

The department itself has sought to take advantage of these developments by consolidating improvements it has made and exploring new ways of lifting the industry.

There are attempts to develop mechanisms to support new entrants in the industry, with attention particularly on juniors and mid-tier players. This is critical for the sustainability of the industry and economy, as small operators can take up mining activities that are usually unattractive to big operations.

South Africans are ambivalent to rating agencies. Nevertheless, ratings are a mirror; a means to assess where we need to improve and where we should consolidate our efforts. The Fraser Institute ranking is an important, external report card for the mining sector. It evaluates the extent to which government policy decisions attract or repel investment. Progress made by the department in the past 12 months, evident in the latest ratings, has begun to unlock the potential of the mining industry.

More work still needs to be done in partnership with labour, industry and mining communities to further improve our mining investment attractiveness ranking, become competitive and transform the sector.

Among the key factors that should  form part of this partnership is the ability to communicate a common, positive message. During the 2018 state  of the nation address, the president emphasised the need for partnership to achieve a social compact that will address SA’s economic challenges. He set the government an audacious target of raising over R1-trillion in investment into the economy in five years. Unleashed, the mining industry can contribute to the president’s goal.

The improved country ranking points to SA mining turning the corner. It must maintain course, be competitive and transformative.

• Helepi is special adviser to the mineral resources minister.