The South African Institute of Race Relations (SAIRR) recently stated that South Africa had become significantly less attractive as a mining investment destination since 2006.
Allan Reid, a Director in the Corporate and Commercial practice at Cliffe Dekker Hofmeyr commented: “The results of the research done by the South African Institute of Race Relations echo the sentiments being expressed by numerous of its local and international resource clients.
“South Africa’s slide to 67 out of 79 countries surveyed last year by the Fraser Institute annual survey of mining companies should come as no surprise.
“The year before, South Africa ranked 61 out of 72 countries surveyed, but there was at least industry optimism that matters would improve,” he says.
Reid notes that this optimism was based on the expectancy that the consultative process between government, organised labour and industry players through the Mining Industry Growth, Development and Employment Task Team (Migdett) would help to resolve issues such as the reform and consistent application of legislation; violent and frequent labour unrest; labour supply and skills.
The delays experienced in the processing of applications for mining and prospecting rights; and the implementation of the policies adopted in the ‘Strategy for the Sustainable Growth and Meaningful Transformation of South Africa’s Mining Industry’ document.
“Regrettably,” he says,” Migdett does not appear to have had much tangible success. Mining companies frequently find themselves at loggerheads with the unrealistic demands of the regulator.
“The amendments to South Africa’s mining legislation and regulatory framework were anticipated to have been finalised by late last year.
“This target is now late 2012, resulting in continuing uncertainty in certain significant areas of the law.
“The nationalisation debate has still not been resolved, although it is hoped that greater certainty on Government’s stance on this issue will be forthcoming during this year’s Mining Indaba.”
Reid adds that in addition to these internal issues, South Africa’s mining industry now also has to contend with a host of negative external factors too.
These include the fact that increasingly, South Africa has to compete for mining investment with other African destinations and that investment resources are becoming scarcer due to the on-going Euro crisis.
“Alternative markets in Canada, Australia, Asia and South America are expanding. South Africa has no option but to radically improve its image as a mining investment destination.
“The mining industry can only do so much. The burden for reform lies squarely on the shoulders of government.”