Confidence crippled as policy flops cause crisis
Key governance and policy challenges in SA have eroded business and investor confidence. In effect, according to Roger Baxter, the CEO of the Chamber of Mines, “policy and regulatory uncertainty have frozen new investment in the sector”.
“It is extremely difficult to get any company investment committee to approve any new greenfields project in SA today,” Baxter told the Africa DownUnder Conference in Perth, Australia, earlier in September.
Baxter had three clear messages for investors: mining is important for SA; the local mining sector is in crisis; and there are ways to “restore the dream” of a prosperous, growing, and transformed mining sector.
“Real mining GDP in 2016 of R226bn was less than the R242bn reported in 1994. Real mining fixed investment has shrunk over the past two years, with large parts of the industry continuing to report losses.”
Baxter said it was very concerning that the minister of mineral resources paid scant attention to this crisis in his conference presentation.
He said the industry was very surprised that the minister claimed to have received positive feedback from any investor on the Department of Mineral Resources’ Mining Charter, or the state of the industry. This had not been the industry’s experience, and the industry engaged with investors regularly.
“The economic opportunity cost of the failure to get the policy, legislative, administrative and operating environment right to promote mining is material.”
Baxter said key uncertainties being perpetuated by the department included:
Uncertainty created by the department’s unilaterally developed and imposed charter;
Uncertainty about the ownership element of the charter;
Uncertainty over the Mineral and Petroleum Resources Development Amendment Bill, which is incomplete after being published nearly five years ago;
Uncertainty regarding the minister’s proposed section 49 moratorium on new right and section 11 applications;
Uncertainty created by double financial provision for environmental rehabilitation.
Baxter said the chamber and its members had lost confidence in the minister: “Significant corruption allegations against the minister and department have not been cleared.
“The industry does not believe the department’s approach is serving the national interest and the negative impacts of [the uncertainties] have created a major crisis. The industry is of the firm view that the department’s charter is designed to benefit a select few at the expense of the country.”
Baxter said getting mining back on track required policy and regulatory certainty, and oversight that recognised mining’s unique characteristics.
“Policies need to help reduce the risks of investment in longterm projects,” said Baxter.
“Mining stakeholders reached a precipice in the past, but realised mutually agreeable solutions are possible. This requires ethical leadership and a focus on the national interest by all.”