Mining regulatory environment ‘a mess’

THE TWO-day Junior Mining Indaba which began in Johannesburg yesterday highlighted how South Africa’s deteriorating regulatory regime and negative investment sentiment was stifling growth for smaller houses.

The annual event is seen as an opportunity for junior miners to find solutions to problems ranging from lack of funds, regulatory uncertainty to attracting investment, despite the subdued global economic growth outlook.

However, the absence of government officials on the programme was the latest indication of the trust deficit between industry and the government.

Delegates heard how even with the imminent gazetting of the mining charter, the industry would not likelyrestore its fortunes.

Paul Miller, Mining Finance, Corporate and Investment Banking, Nedbank Capital, said it was going to take more than gazetting the mining charter to bring stability to South Africa’s ailing mining industry. He told the more than 300 explorers, developers and investors at the indaba that the regulation had been hamstrung by activist government officials who had political motives when applying the law.

“The mining charter gives too much discretion in the hands of officials in the Department of Mineral Resources (DMR) in the regional offices,” said Miller.

“The problem with the charter is that officials in regional offices interpret the rules differently and you cannot get rid of that,” Miller said, adding that South Africa had been overtaken by countries like Tanzania, and Botswana as favourite investment destinations.

“South Africa is perceived as a no go area for projects because investors think their mining projects will be stolen because of the regulatory environment,” Miller said.

Jacinto Rocha, a director at the Mineral Investment Advisory Services and former director-general of the DMR said that the regulatory system was inefficient.

Hulme Scholes, a director at Malan Scholes, said that the regulatory environment was a mess.

“We are sitting with a mess. We have regulation that creates confusion. We have weak leadership which is not able to make decisions,” he said, referring to the delay in the release of the charter.

The Chamber of Mines, which represents 90 percent of mining houses, has previously complained that the new version of the charter which is expected to be made into law next week has unrealistic targets. It also said previously it would go to courts if the mining charter was not in line with expectations.