Let’s kick-start investment
SA one of the 10 least attractive options – but don’t you believe it. MINING: 20 THINGS GOVERNMENT NEEDS TO START DOING
Delegates at the upcoming Mining Indaba expect to hear President Cyril Ramaphosa and Minister of Mineral Resources and Energy Gwede Mantashe explain how they intend to take concrete action on a number of pressing issues that are frustrating mining companies.
This follows South Africa’s relegation in the latest annual Fraser Institute Survey of Mining Companies to one of the 10 least attractive mining investment destinations, out of 84 surveyed. South Africa is at risk of again missing out on the current commodities upcycle.
Several of the following issues have been raised over several years, but there has been no visible progress. Government needs to:
1. Review the Mineral and Petroleum Resources Development Act and Mining Charter to bring local ownership requirements in line with international best practice and ensure that ownership becomes truly broadbased rather than benefitting a select few.
2. Establish a forum for business, government, communities and labour to address environmental, social and governance (ESG) issues in a coordinated way, rather than having a separate approach to each element.
3. Do away with cumbersome administrative processes that dissuade investors from investing in South Africa and ensure policy consistency.
4. Develop a regulatory system that encourages and incentivises investment in prospecting activities and is efficient.
5. Apply regulatory consistency in the investigation of mine accidents and the manner in which inquiries are held.
6. Lighten the onerous regulatory and reporting burden on mining companies where these laws overlap with corporates’ ESG actions.
7. Implement a functioning cadastral system to administer the granting of rights and permits.
8. Allow rehabilitation guarantees to be used for ongoing rehabilitation and post-mine planning, rather than insisting that the funds sit idle until mine closure.
9. Smooth the path for mines wishing to procure clean power from independent power producers.
10. Update the Integrated Resource Plan, which only takes South Africa’s power planning to 2030.
11. Increase investment in the electricity transmission network to overcome capacity restraints.
12. Resolve the problems besetting Transnet’s rail network, which are costing both the private sector and the fiscus billions of rands in lost opportunity and revenue.
13. Review the process of granting concessions to the private sector to run portions of the rail network. These concessions should be for 15 years or longer to attract private sector investors.
14. Improve the incentives in the Carbon Tax Act for mining companies to invest in carbon offset projects.
15. Address the inefficiencies in delivering fuel levy refunds to qualifying users of distillate fuel (diesel). The Customs and Excise Act, which governs these refunds, lacks the same mechanisms as the Tax Administration Act to speed up the processing and payment of refunds.
16. Satisfy the long-running plea from the industry for flowthrough shares (where some of the capital investment incentives are passed onto shareholders) to help fund mining exploration and development.
17. Improve service delivery to mining communities to reduce the pressure and/or dependency laid on mining companies to provide basic services. Strengthen and capacitate local Saps to enable swift and effective responses to illegal mining and violent protests.
18. Establish a community engagement forum which includes local communities, mining companies and government representation to mitigate the risk of unlawful protests following a breakdown of communications between the parties.
19. Establish an administrative dispute resolution mechanism to deal with disputes between mining companies and local communities to avoid unlawful protests, the undue halting of mining operations and alleviate the burden on courts tasked with adjudicating such disputes.
20. Conduct community awareness programmes to educate mining communities on the exact obligations owed to them by mining companies and obligations owed to them by government, to mitigate the risk of unlawful protests, based on socioeconomic needs, against mining companies.