JOHANNESBURG - Mining companies have either placed investments on hold or focused efforts on other destinations as they did not see worthwhile opportunities in South Africa because of the adverse trading environment.

These were some of the findings of a study conducted by the Chamber of Mines to determine what the impact of a better regulatory environment could be on investment plans.

A total of 16 companies participated in the survey.

The chamber’s chief executive Roger Baxter said yesterday that the findings illustrated that if South Africa focused on creating an attractive policy and regulatory and governance environment through ethical leadership, and competitive, stable and predictable policies, considerable new investment in mining could take place.

“Taking this into account, the economic and transformational opportunity cost of the current toxic environment is detrimental to each and every South African,” Baxter said.

Five companies responded that they were not considering any potential new investments, with one saying it was contemplating divesting from South Africa entirely - a decision which would be taken next year if the situation did not improve.

The study also found that much of the currently planned investment was “stay in business” while investment in new mines had halved between 2012 and 2016.

The report also indicated that the publication of the Department of Mineral Resources' reviewed mining charter would significantly exacerbate the decreasing trend in investment.

Capital spending

The estimated current capital spending in the mining sector over the next four years was more than R145billion. The potential capital expenditure in a more certain and conducive environment covering at least another three years could amount to an additional outlay of more than R122bn.

“This means that capital expenditure on mining projects could be 84percent higher than the current R145bn. The impact on employment creation, according to the survey results, would be nearly 48000 people,” the report found.

Another interesting finding was that the relative contribution to investment of the R122bn potential spend did not correlate with the relative employment impact.

“For example, the coal sector has the highest investment potential, representing 42percent of the total potential investment, but only 31percent of the employment potential. The converse is true of the gold sector having the highest employment potential 62percent of total potential jobs but only 31percent of the capital spend.

"Of the current capital expenditure, the platinum group metals are spending the most, or nearly 46percent of the total,” the survey said.