Implement reforms quickly to woo foreign capital, Vedanta’s chief urges
• Political turmoil must be set aside and policy must be clear for investors, says Agarwal
As SA’s second investment summit wrapped up this week, Vedanta Resources chair Anil Agarwal urged the government quickly to implement reforms to attract capital to SA.
“Investment will not come until a time when political turmoil is set aside and there is a clear policy for investors,” Agarwal said in an interview with Business Day.
President Cyril Ramaphosa’s second investment conference attracted investment pledges of R363bn this week. This follows R300bn pledged at the 2018 conference. Ramaphosa’s target is R1.2-trillion by 2023.
Agarwal has been a vocal proponent of SA as an investment destination. As the largest shareholder in Anglo American until his recent divestment, Agarwal pushed the JSE-listed miner to raise its focus on SA.
In 2018, Vedanta, a multinational miner based in India, pledged to invest $1.2bn (about R17.6bn) in SA, but said the government has to come to the party if the full investment is to be unlocked.
Included in the pledge is $400m spent on developing the first phase of Vedanta’s Gamsberg mine in Northern Cape. Expansion of the project into phase two will increase output from 250,000 tons a year to 450,000 tons. A feasibility study has been completed and Vedanta is testing the market.
Also part of the pledge is a $700m zinc smelter, which will require competitively priced and reliable electricity.
To pursue these additional investments, Agarwal said Vedanta needs certainty on whether a Namaqua special economic zone will be created, as is being contemplated. Special economic zones lower the effective tax rate for businesses in them and expedite approvals for projects.
“We need to know that there is the right energy policy because we are going to need committed baseload, as well as committed renewables,” said Deshnee Naidoo, CEO of Vedanta Zinc International. For example, “the government has mentioned a lot about the next phase of independent power procurement. We would like a piece of that”, Naidoo said.
“The hurdle for us is not the clarity on what they have to do, it’s the speed,” Naidoo said. “I think we are little more down the line than some other investments in terms of what is required; it’s now about bedding the policy down to support this.”
The Northern Cape has little industry but tremendous potential, and a smelter will be a huge development for the region that can create a number of downstream industries, Agarwal said.
Despite the sticking points, he remains bullish about SA.
“We have just started investing in SA. I’m going to take over more and more positions when the opportunity comes. SA has not even touched the tip of the iceberg when it comes to the potential ... in human resources and natural resources.”
SA HAS NOT EVEN TOUCHED THE TIP OF THE ICEBERG WHEN IT COMES TO THE POTENTIAL