Mining investment in South Africa has the potential to double over the next four years which would “materially increase output, exports and procurement”, according to CEO of the Minerals Council, Roger Baxter.
Delivering his keynote address at the two-day Johannesburg Mining Indaba last week, Baxter said that the sector had seen “one of the harshest environments in decades” but that there was a “new dawn” on the horizon following the appointment of a new Minister of Mineral Resources, Gwede Mantashe. “In the few short months since his appointment he has brought about rapid change in the department and the industry, and at the same time, moved to instil a greater degree of certainty, greater engagement and openness,” he said.
Baxter pointed out that along with policy certainty, the development of a competitive strategy for mining was “crucial” to encourage investment in the industry. South Africa’s mining potential is ranked by Canadian analyst, the Fraser Institute, as 20 out of 90 when assuming best practice.
“Even in the absence of a greenfields exploration boom, a study undertaken by the Minerals Council shows that mining investment could almost double in four years should South Africa return to the top quartile of the most attractive mining investment destinations,” said Baxter, adding that it remained a truism that “if mining succeeds, the country succeeds”.
He was adamant that such doubling of investment was possible, pointing out between 2013 and 2017, real capital formation in mining had dropped by 50%. “The significant investments we are seeing in other mining jurisdictions around the world should be an indication that we can claim our share,” said Baxter. In his view the consequences of a doubling investment could be a “game-changer” – not only for increased production and subsequent higher export numbers, but for “substantial funding” for infrastructure development.
To create a conducive investment environment, said Baxter, there was a need for policy certainty from the state, especially ahead of the 2019 national elections.
“Make no mistake, investors will be attentively watching,” he said, having just returned from Denver, Colorado in the United States where he attended a gathering of some of the world’s leading precious metals investors. “I was asked at every turn about expropriation without compensation.”
He said that while president Cyril Ramaphosa had sought to reassure potential investors, the impact of such debates on investors should not be under-estimated. “Markets are built, and fail, on perceptions.”
Markets are built, and fail, on perceptions. – Roger Baxter
