Miners blame SA’s structural challenges
Leaders of major mining companies say the government should make South Africa an attractive investment destination for the industry. No post-election administration should ever entertain talk of nationalising key economic assets, they say.
Speaking at the Investing in African Mining Indaba in Cape Town this week, three top executives said structural challenges remain a burden for investors.
July Ndlovu, Thungela Resources CEO, said South Africa has been grappling with significant constraints from an investment point of view, especially in mining.
“For instance, the ability to license mines has been, at best, pedestrian, if not chaotic. I hear the minister say that there will be some improvements.
“We don’t see the same issues elsewhere. We are fortunate to be in another jurisdiction now, and their requirements are clear. If you follow them, you get your licence or you
get a ‘no’. The licence regime needs to change.”
Ahead of the indaba, the department of mineral resources & energy announced the operator of a cadastral system to speed up the application and awarding of mining licences and permits. It was revealed in January that the department had received 2,500 mining applications in financial 2024 but not one was finalised.
Ndlovu said for a developing economy some of South Africa’s policies are at a first world level, particularly when it comes to the environment. However, more needs to be done to address logistics bottlenecks, energy shortages and to intensify the fight against crime, including illegal mining in coalfields.
“When you describe this to investors, they shake their heads.”
The more than 8,000 delegates at the indaba from 126 countries, including international investors, heard how crime, loadshedding and the problems at Transnet are hobbling the local mining industry.
“You have listened to the conversations, you can get a distinct sense that the rest of Africa is marching ahead of us, and yet we are a natural resource-endowed country. I do not think we are doing as much as we can to attract investment, and yet we have things that work to our advantage,” Ndlovu said.
Neal Froneman, CEO of Sibanye-Stillwater, one of the country’s biggest producers of platinum group metals (PGMs), said there are serious challenges in South Africa that create a reluctance to invest.
“Logistics is a mess, and of course there is crime and corruption. Those things need to change, and we are working together with the government on them to create a much more investor-friendly environment so that, ultimately, proper investment can take place and that investment will lead to addressing inequality and poverty and the creation of jobs,” he said.
Froneman, who is a member of one of the crisis committees created under the presidency to help the government fight crime and corruption, said part of the focus is on combating illegal mining.
He warned that any talk of nationalisa
tion needs to be cooled down. There are fears that the issue could be used as a bargaining chip by parties such as the EFF in post-election coalition talks if the ANC’s share of the vote came to less than 50%, as many are expecting.
“Nationalisation does not work. It will destroy our country. It destroyed Zambia. Those old political models are well and truly dead and buried, [but] not in the minds of certain political parties.”
Anglo American Platinum, which has reduced its capital expenditure and halved its sustaining capital to keep assets in shape in the face of low prices, said mining is a significant contributor to the economy and the industry will continue working with any new administration after the election.
CEO Craig Miller said, “I think we need to work with whoever the government of the day is” after the election, be it the ANC, some other party or a coalition. He said nationalisation of mines will not succeed as there is little evidence globally that it has worked anywhere.
“I would suggest that continuing to have the private sector own and run mines is the logical approach. There are not many global examples of where a nationalised mining company is hugely successful. Chile is probably one where they operate Codelco, but it is a private and state-run copper mining company,” he said.
“We are unique in that we have to deal with electricity and logistics. In other jurisdictions, I can deal with people changing the royalty or tax regime, or anything similar, overnight.”
The Church of England Pensions Board, which looks after an estimated R76.4bn in assets globally on behalf of 42,200 pension fund members, including those who have dedicated their lives in service to the church, said South Africa remains a hugely important economy.
Chief investment officer Adam Matthew said: “We wanted to initiate an institutional investors’ dialogue with South Africa in terms of how we can be proactively, constructively supportive to them achieving their ambitions. But I think that is going to involve us working with companies that are headquartered here ... have significant operations here, and getting more institutional investors looking at South Africa and finding ways that we can actually bring the kind of investment it needs.”
The pensions board’s investments include South African equities and government bonds.
President Cyril Ramaphosa said in his state of the nation address on Thursday that mining is once again turning into a sunrise industry.
“To support growth in the mining sector, we are moving ahead with the modernisation of our mining rights licensing system and are launching an exploration fund to support emerging miners and exploit new mineral deposits. Through this, mining, which was the bedrock on which the South African economy was built, will once again become a sunrise industry,” he said.