South Africa has no time to waste when it comes to getting investment back on its agenda, said Norman Mbazima, deputy chairman of Anglo American SA. “The numbers are telling. Last year, South Africa’s GDP grew by a mere 0.7%, well below our population growth of 1.61% and below most of our neighbours,” he said. “By the third quarter last year, unemployment came in at 27.7% – the highest rate in 13 years, while the finance minister in his Medium Term Budget indicated a revenue shortfall of some R50.8 billion, and an expected budget deficit of 4.3% of GDP.” Describing the statistics as alarming, Mbazima said they clearly indicated the desperate need for the country to grow its economy at a significantly faster rate. “The mining industry, and indeed every other industry, has to contribute – as much as it possibly can – to the required growth. But the sector’s current performance cannot be described as satisfactory,” he said Mining investment has been under extreme pressure amidst widespread political and policy uncertainty. Gross fixed investment in mining has been stagnant since 2009, and has declined by 5% over the course of the last three years, while net investment has declined by 57% since 2008. Despite commodity prices improving by about 11% on average since 2006, the output of the industry remained stagnant. According to Mbazima attracting investment depends largely on the political and regulatory environment in South Africa. “At Anglo American we are clear on our position: we are in the business of mining, not politics. The people of each country in which we operate choose their leaders according to their processes. We will work with those leaders and are interested in the policies that are adopted and how those policies are applied,” he said. The outcome of the ANC’s hotly contested elective conference in December last year was a significant ‘first step’ towards stabilising the political dynamics in the country, he added. “Our view is that if the right choices are made, South Africa will regain its momentum and this will bring together all social partners – government, business, labour, and civil society – and provide a renewed sense of hope.” Just as important, he said, was not underestimating the negative effects of poor and inconsistent regulation. “Very large amounts of capital are needed to start a mine. Your capital is deployed over a very long period of time before it can be recouped. It is for this reason that investors require a clear, concise and consistent regulatory environment to justify investing,” he said. “At present we have anything but a conducive regulatory environment. “The relationship between the Department of Mineral Resources and Industry is at an all-time low,” said Mbazima who concluded that resolving the current Mining Charter impasse was critical for any progress.
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Investors require a clear, concise and consistent regulatory environment to justify investing. – Norman Mbazima
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