Australia’s resources houses have been encouraged to continue their historic investment levels in South Africa’s mining sector but to increasingly link that investment with government initiatives to deliver greater mine safety. At the same conference, Ann Harrap, Australian High Commissioner to South Africa, Botswana, Mozambique and Namibia; High Commissioner-Designate to Lesotho, and Swaziland; and Ambassador-Designate to Angola says it will be”interesting to watch how those countries address some of the serious skills challenges that all of them are facing.

Addressing the Paydirt 2009 Africa DownUnder Conference, yesterday, South Africa’s Minister of Mineral Resources, Hon Susan Shabangu, said profits from mining in South Africa could not continue at the expense of the health of mining workers. “We are introducing much tougher obligations on the sector and its stakeholders to cut the unacceptably high death rate in our mining performance and for our investors to value being part of a far greater focus on workplace occupational health and safety,” she said. “The Government does not plan for these amendments to be a deterrent to ongoing Australian investment in our mineral wealth. Rather, Australian investors should see this safety drive as an enhancement of their investment and part of recognising that South Africa is now a destination that cares for its employees in exploration and mine production.”

Australia has invested more than A$1 billion in South Africa in recent years, the bulk of which has gone to resources projects. “South Africa is open to business and we invite Australia’s mining houses to continue to investigate and evaluate what mining opportunities can be developed so that a stronger mining partnership continues between the two countries,” Shabangu said. “We also assure Australian investment and mining stakeholders that we have recognised our energy grid problems within the country. We know it has suffered a number of shortcomings but we are now taking a number of steps to make sure lack of adequate or consistent electricity supply does not impact negatively on mining productivity.

“South Africa boasts major coal reserves with a coal life span of more than 150 years – so investors in our resources can increasingly do business without fear of power supply shortages, particularly as we emerge from the effects of the global financial crisis. Mining accounts for around 50% of our GDP and will continue to do so but we also need to now attract investment that can value-add to our primary resources wealth and create a second-tier economy from beneficiating our mineral resources.”

The Minister revealed that stimulus packages by the South African Government had minimised the effect of the global financial crisis (GFC), limiting job losses in the mining sector to below 30,000 as against predictions of 100,000 job losses across mining operations. “This represents less than 5% of South Africa’s mining employee numbers and sends a strong signal to overseas resources investors that they have a partner in the South African Government that is capable of managing the transition in our mining aspirations to greater partnerships and joint ventures despite global pressures.”

Shabangu said the outcome would be announced shortly of the Government’s review of the country’s mining charter as part of the need to “transform our mining industry” as part of achieving greater job creation, skills development economic growth.

Harrap said “the human resource capacity constraints are very obvious in the public sector in southern Africa – in the departments that register your company, grant your mining licence or collect your tax.  And it will be important for southern African countries to seriously address those constraints if they want to attract more foreign investment and business. 

“Critical skills shortages are also an issue in South Africa and do impact on the business environment.  Delays in the issuing of work permits and new order mining licences can, in my view, be directly attributed to capacity constraints.” Some say, she said “that part of the issue is the emigration of skills from South Africa to Australia – I just want to debunk the migration myth on the head.  Yes, there are skilled South Africans moving to Australia (but not as many as some would have you believe) and replacing those skills quickly is a policy challenge for the SA government and also for Australia as we work through our development assistance program with SA – BUT – it’s important to also look at the benefits for both countries that have derived from migration.

“The Australia-SA trading relationship is worth over A$4 billion per year, with average growth of about 11% year on year over the past five years.  There are now 12 direct flights per week between the two countries and more than 100,000 Australians visit South Africa a year, significantly contributing to the local economy. Now I don’t have empirical evidence to prove the linkages, but to my mind it’s logical that a good portion of the growth in the economic relationship between Australia and South Africa can be attributable to migration.

“So what are the business opportunities in South Africa and what sort of business climate do we find there?  In answering the second part of the question, we obviously also have to ask ourselves what sort of a job the government of President Zuma is doing.  We’re not long past the first 100 days of the Zuma presidency and I think the report card is reasonably good.  At a time when South Africa is facing its most sever growth contraction for more than 24 years and is dealing with significant unemployment pressure, we are seeing a government holding its nerve and placing priority attention on areas designed to grow the economy and give confidence to the business community.  Education, service delivery and crime – all areas of interest to business are being worked through – and the R787 billion stimulus spending on infrastructure is having an impact.

“Now that is not to say there are not challenges to doing business in southern Africa There is still some uncertainty about how the various economic portfolios are going to interrelate with one another (but the widely predicted ‘lurch to the left’ has not materialised); one could question the economic sense of a Cabinet that contains 34 ministers and 28 deputy ministers; and people are waiting with some anticipation to see who President Zuma appoints to replace the three retiring judges on the constitutional court later this year and the implications that will have for the role of the judiciary.  And you probably will have seen some of the strikes in recent months in South Africa, and the at times violent service delivery protests – and this has dented business confidence somewhat.  It underlines the new administration’s biggest challenge – be dealing with the ambitions of a large group of unskilled and unemployed youth who all voted for better service delivery and a better life – and who expect Zuma to deliver on that.

“Another factor is the reality that South Africa is still undergoing its transformation process.  Overcoming the legacy of apartheid has seen various empowerment programs for previously disadvantaged people – in South Africa this set of policies is known as Black Economic Empowerment.  It is important for Australian business operating in southern Africa to be aware of the various policies in this area.

“But on the whole – I think the whole tone of this Presidency is positive, the renewed focus on reconciliation is extremely important in a South African context and there are real opportunities for Australian business to take advantage of – particularly in services, education, construction, and resources.”