Norman Mbazima on Anglo’s vote of confidence in SA
New investment can be cut short if climate darkens, says miner
● Norman Mbazima, the head of Anglo American in SA, says the R71.5bn investment it announced last week was a vote of confidence in the direction of the country.
“We’ve seen changes in the political situation that make us a lot more confident about investing,” says Zambia-born Mbazima, who is Anglo SA’s deputy chair and sits on the group management committee of Anglo American Plc in London.
Anglo used the investment summit last week to announce that it would spend the money between 2018 and 2022 to sustain and extend the lives of its mines and save 72,000 jobs.
The most important change is “the discourse”, Mbazima says. “There’s a new openness to investment in SA, a recognition of the importance of investment.”
But though “the right ethos is there, now it’s the implementation and execution that needs to happen”, he says.
“We need to see the things we’ve been speaking about being implemented.”
In the policy and regulatory space, “the most important things for us are clarity, certainty and consistency”.
Anglo has reduced its assets in SA to 25% but still has extensive investments in diamonds, iron ore, coal and platinum group metals, and has put further reductions on hold.
“We’re no longer the biggest thing since sliced bread in SA but we are the biggest thing in mining, and we’d like to move that investment forward.”
Though he insists that Anglo’s “disposal mode” was driven entirely by its distressed international balance sheet and had “absolutely nothing” to do with the country’s political/regulatory situation, political and regulatory conditions will weigh heavily on future investment decisions.
And if the current environment deteriorates then even the investment announced last week won’t necessarily “happen to the finish”, he says.
Mining is a massively expensive and longterm commitment “and therefore you need a long period of consistent and good regulations for your confidence to increase and for you to invest more and more”.
The recently promulgated Mining Charter 3 is a good start. “It creates the right environment for you to invest in the mines that you currently have.”
But although the final version of the charter is a big improvement on the model imposed by former minister of mineral resources Mosebenzi Zwane, the compliance obligations attached to the charter are still “onerous”, and it doesn’t do enough to encourage investment in new mines, Mbazima says.
“I’d say it probably needs to do a bit more to get there. But we’ve taken a step in the right direction that enables us to at least look, whereas before we wouldn’t have bothered even to look.”
More clarity from Zwane’s successor as minister, Gwede Mantashe, is needed to attract the kind of investment for new projects that is critical for the industry, he says.
And it is urgently needed.
“The exploration environment has not been good so there has not been much exploration happening outside people’s current licences,” Mbazima says.
It can easily take 15 years from the time of an initial investment for a new project to start delivering, he says.
“So you need to start exploring now. So there is no time to waste on achieving the necessary clarity.”
Something else that needs to be sorted out quickly after years of dithering and confusion is the Mineral and Petroleum Resources Development Amendment Bill, which Mantashe has withdrawn for further discussion.
“It was an excellent step, taking it off the table after six years of confusion, to now resolve the contentious issues,” says Mbazima.
He hopes that when it comes back onto the table it will “finally provide the amendments required to enhance the local industry”.
Mbazima says the most hopeful sign of progress is that the minister and the Minerals Council (formerly the Chamber of Mines) are reading from the same hymn book at last.
“I can’t tell you how much good comes from that in terms of investment promotion.”
Another major investment-sensitive issue demanding clarity is expropriation without compensation, which the ANC has adopted as part of its land reform policy.
He says although Anglo does not fear that this measure will be applied to land on which it mines, “our concern is more about how does this play into the investment environment of the country in which we’re investing?”
It needs to be resolved as quickly as possible, he says.
“We look forward to this whole thing being concluded. Again, we need consistency. So that when people consider coming to invest in SA they know exactly what is going to happen to their land.”
He does not want the policy taken off the table, though. It’s a debate that needs to happen. “If you take it off the table it’s going to come back at some future date. But it needs to be resolved properly, amicably, in major debates, so that we make sure we have a permanent solution that will endure into the future.”
Mbazima says Anglo never sought any guarantees from President Cyril Ramaphosa before announcing its investment.
“Getting a guarantee from a president is probably not the best way to do business. Presidents come and go.”
How would it affect Anglo’s investment decisions if Ramaphosa were to be ousted after next year’s elections?
“We are looking at what are the laws of the country, what are the policies of the country. Of course, we have to look at politics, but are the politics necessarily attached to one particular individual? No.
“The politics of the country are developing. For example, we’ve seen a lot more balance, such as Johannesburg now being ruled by a different party, and so on.”
From an investment point of view, the country’s institutions matter more than who happens to be president.
“We’ve seen how the judiciary has tended to counterbalance some of the excesses from government. So it’s the institutions that we track, more than the individual.”
But, he says, “in the event of the politics and regulatory environment regressing, with or without this president, we’d obviously have to reconsider how much more to invest, or how much less to invest”.
We’ve taken a step in the right direction that enables us to at least look, whereas before we wouldn’t have bothered even to look