South Africa Looking to Increase Mining Investment

THE CONFERENCE CALLER: The reinvigoration of South Africa’s beleaguered mining industry is hoping to attract new investment of more than $11 billion, or around 122 billion rand, over and above current project commitments.

The outlook was posted on the second day of the three day Paydirt 2018 Africa Down Under mining conference in Perth by the chief executive officer of the Minerals Council South Africa, Roger Baxter.

Recognising that the minerals rich country had not reached its full mining potential in the past decade, Baxter said key findings of an industry report last year for change and now backed by government, pointed to a much stronger outlook if implemented successfully.

“The current mining capex for the next four years for South Africa is R145 billion,” Baxter said.

“Potential new capital expenditure under a more certain and conducive environment would add a further R122 billion (A$11 billion plus) to this outcome.

“This is 84 per cent higher than current commitments.

“Our findings last year showed that most companies had held back investment due to South Africa’s then mining policies and uncertain regulatory environment.

“This dampened outlook also included certain minerals, due to adverse economic conditions.

“But our modelling has also shown that if South Africa gets back into the top 25 per cent of favoured mining investment destinations globally, this would create a further 200,000 jobs.

“It would profound positive impacts on South Africa’s minerals supply chain, export earnings, taxation contributions and ultimately, the much desired transformation of South Africa’s mining industry to where it should be, given its mineral wealth.”

The Minerals Council chief said reforms enacted this year were showing green shoots for the industry, and would come to a head with a proposed international investment summit in November this year.

The only thorns among the green shoots included anxieties around talks on land expropriation without compensation and the agreement yet on a satisfactory Mining Charter.

Baxter acknowledged that South Africa’s once internationally renowned mining reputation, had, “been through a tough patch”.

“From 2013 to 2017, real net capital formation in South Africa’s mining sector declined by 50 per cent,” Baxter said.

“The investment pipeline has also been weak – the country attracting just one per cent of total global exploration expenditure last year compared to 14 per cent for each of Australia and Canada.

“Of the South African exploration allocation, only 10 per cent of that was on greenfields activity – meaning a much weaker and limited pipeline of new mining projects being developed.”

Baxter said the Minerals Council believed the economic and transformational potential of mining in South Africa was huge – and an invigorated best practice approach could see mining investment double in just four years.