In his keynote address, Norman Mbazima, Deputy Chairman of Anglo American SA said “this year, the Mining Indaba happens in an ever-changing world, filled with continued uncertainty and opportunities. Today, I would like to focus on what is required to encourage investment back into South Africa’s mining industry. This is a subject that needs an honest airing. The numbers are telling:
- Last year, South Africa’s GDP grew by a mere 0.7%, well below our population growth of 1.61% and below most of our neighbours
- By the third quarter last year, unemployment came in at 27.7%—the highest rate in 13 years
- In his Medium Term Budget Speech, the Finance Minister indicated that there would be a revenue shortfall of some R50.8 billion, and that our budget deficit would be 4.3% of GDP.
“These are alarming statistics. They indicate that South Africa desperately needs to grow its economy at a significantly faster rate. Such growth would help increase government revenue, fund government expenditure, especially the social welfare that some 17 million of our citizens depend on, and provide employment opportunities especially for the youth whose unemployment rate is closer to 40%.
“The mining industry, and indeed every other industry, has to contribute—as much as it possibly can—to the required growth. But, the sector’s current performance cannot be described as satisfactory.
“In December last year, the South African Chamber of Mines published a report on mining investment in South Africa, which shows that:
- Gross fixed investment in mining has been stagnant since 2009, and has declined by 5% over the course of the last three years
- While net investment has declined by 57% since 2008
- And despite commodity prices improving by about 11% on average since 2006, our output as an industry has been stagnant.
“I want to argue—and I hope I am preaching to the converted here—that we urgently need to get investment back on the agenda for South Africa.
“While we may have one of the world’s most endowed mining jurisdictions, we have not been able to bring this endowment to account. We need to attract capital for South Africa’s mining industry, whether foreign or domestic, and we must accept that such capital needs to get a competitive return.”
In closing, he stressed that the “five fundamentals that can encourage investment back into South Africa’s mining industry are:
- a stabilising political environment
- coupled with a regulatory environment that encourages investment
- along with ramping up investment in rail and port infrastructure
- and understanding the importance of financial returns, fund flows and investment promotion.
“We are constantly reminded of the triple scourge of poverty, unemployment, and inequality in South Africa. The performance of our economy in 2017 does nothing to alleviate this, instead, it exacerbates it.
“We desperately need the economy to grow much faster than the 0.7% we recorded so that we can generate employment and increase government revenue.
“The mining industry can be a significant contributor to this growth, but only if we make conditions right for investment.