The world’s largest gathering of investors in African mining runs in Cape Town from today until Thursday as South Africa goes through major teething problems over mining rights and the broadening of black ownership.
Omega Investment Research chairman Denis Worrall told an investment conference ahead of the Mining Indaba that it would be interesting to see what messages emerged regarding South Africa’s mining industry.
“Investors are turned off and the mood within the industry is pessimistic,” he said.
While the focus will be on the continent as a whole, the gathering of 4 000 delegates will be briefed by Mineral Resources Minister Susan Shabangu on the ending of a moratorium on licensing that was imposed to allow her department to sort out its woes.
At least 180 countries will be represented, including China, Australia and Japan.
Worrall, a former South African ambassador to the UK, said the pessimism was surprising “because as every South African schoolkid knows” South Africa was recognised as a treasure trove, boasting an abundance of mineral resources, producing and owning a significant proportion of the world’s minerals.
Worrall noted that South Africa held 90 percent of the world’s platinum group metals, 80 percent of the manganese, 73 percent of the chrome, 45 percent of the vanadium and 41 percent of the gold. “The only thing we do not have is crude oil and bauxite.”
He said the reasons for the pessimism included the high cost of mining in South Africa compared with Australia, Canada or China and that the deeper the mines became the more dangerous they became. There were also questions about the reliability of electricity and costs had risen by about 40 percent in the past year.
He argued that the policy environment was now less supportive of mining than in the past and black economic empowerment had tended “to increasingly complicate mining mergers and acquisitions and how licences are granted”.
Worrall said it was important that the government spelt out policies “that are clearly transparent in respect to the award of licences and permits and clear up the situation in respect to nationalisation and the ownership of mining assets”. - Business Report