Mineral Resources Minister Mosebenzi Zwane dodged the industry’s most pressing issue when he opened the Investing in African Mining Indaba in Cape Town yesterday by ignoring the brewing Mining Charter controversy. Rather, he used the platform to commend the industry for returning to growth in 2017 and indicated the sector had significantly contributed to the economy in the latter part of the year following a technical recession. He also highlighted the government’s investment into geological mapping and emphasised its value to potential investors.
Deloitte Africa Mining lead Andrew Lane says while 2017 saw improvements for the South African and global mining industry, Minister Zwane should not take credit for the upswing.
“That can be attributed to the increase in commodity prices. Given that South Africa’s investor-friendly reputation has been slightly tarnished, it was hoped he would make an announcement on the Mining Charter,” Lane says.
While Minister Zwane has publicly stated he is open to bilateral discussion with investors, there has been no concrete guidance on the charter, itself subject to a court battle. Lane says Minister Zwane also focused the beneficiation benefits discussion on downstream opportunities, ignoring the upstream opportunities.
“There are several upstream lateral and second and third-order beneficiation opportunities surrounding mining, but the government is fixated on the downstream ones. While downstream manufacturing assists industrialisation, South Africa cannot lay it at the feet of the mining industry – manufacturing is a manufacturing problem and attracting those investors requires cultivating an appealing environment,” he says.
In the Q&A session later in the afternoon Minister Zwane avoided the question regarding the MPRDA, rather referring to his open-door policy. Zwane stated that he is open to a “bosberaad” and willing to engage with stakeholders. Lane remarks, however, that the sentiment within the industry is that regardless of the open-door policy their concerns are not being sufficiently addressed.
Lane says the industry acknowledges and supports the government’s intent to diversify ownership and the importance of junior mining. However, the industry depends on the large mining companies for their capital and skills, and the investment environment should recognise this reality, otherwise they will seek friendlier recipients.
“Given the lack of tangible announcements on the charter, it will be interesting to see how the government enforces regulations when the market is expecting both that document and its responsible minister to change,” Lane concludes.