Red-tape SA far behind Congolese, says investor
• Limpopo project delayed • Differences ‘ startling’
Nkwe Platinum, which is owned by Chinese multinational Zijin Mining and which pledged R13bn to the recent SA Investment Conference, says SA needs to enhance its regulatory environment, citing its Garatau project in Limpopo, which took seven years to get off the ground.
The Chinese mining group used SA and the Democratic Republic of Congo (DRC) in 2014 as a springboard to broaden its reach in Africa, which is endowed with green minerals in high demand as the world looks to transition to a carbon-free future from fossil fuels.
While the Garatau project was still getting out of the starting blocks, the Kolwezi copper mine in the DRC had been well into production, indicating the divergence in the regulatory environment between the two jurisdictions.
The department of minerals, resources & energy has long been criticised for taking too long to grant prospecting and mining rights applications, as well as mineral rights transfers, which happen when companies engage in transactions.
Applications for prospecting rights can take more than 300 working days to be awarded in SA, and about 40 days on average in neighbouring Botswana. One reason is that SA does not have an efficient digital mineral rights management system.
The huge backlog of more than 2,000 rights over a number of years means companies cannot advance projects in either exploration or building mines.
Critics argue that the SA Mineral Resources Administration System, where applications for rights under mining legislation can be submitted electronically, does not work optimally. The level of discretion and human interference in the existing mineral rights processing system is cited as another problem.
In emailed answers to questions, Nkwe Platinum CEO Zhiyu Fan said earlier this week that navigating through the “maze of regulatory challenges” delayed the R13bn Limpopo project, which will position the mine among the top 10 platinum producers in the world once it reaches full production.
In the meantime, Kolwezi in the DRC has produced more than 529,800 tonnes of copper, providing more than 2,000 jobs for local people since its official launch in 2017, after the investment made in 2014.
The differences in the regulatory climate of SA, when compared to other African countries, are startling, according to Fan.
Kamoa Copper in the DRC is set to become the secondlargest copper mine in the world in the near future, after Zijin teamed up with the government, and two other mining companies in a deal dating to 2016.
The Kamoa mine has contributed about $600m in taxes and royalties to date to the DRC, according to Fan. —
SA, meanwhile, is looking to mobilise R2-trillion in investments over the next five years in an initiative championed by President Cyril Ramaphosa after managing to surpass the R1.2trillion target in the first phase of the investment drive.
Gross domestic fixed investment is estimated at about 14% of GDP, according to research done by Absa, down from its peak of 22.7% in the final months of 2008. The decline is due partly to weak business confidence, though the renewable energy projects that are in the pipeline are set to boost it.
The mining industry has more than 9GW of renewable energy projects worth about R160bn planned over the next five to 10 years to help relieve pressure on the national grid.
However, to meaningfully address socioeconomic challenges, the National Development Plan envisages that gross domestic fixed investment will grow to 30% of GDP by 2030.