CAPE TOWN - There are 10 imperatives that South African government, business, and labor must prioritise if they are to overcome ongoing challenges in the mining industry such as subdued demand, high fatality rates, and policy uncertainty, according to a report released on Tuesday.
Global management consulting firm and advisor on business strategy, the Boston Consulting Group (BCG), released the report on the sidelines of the Mining Indaba in Cape Town.
Titled "Working Together to Re-energise the South African Mining Industry", the report identifies priority interventions and the roles that government and the mining industry can play in each, as well as three areas of leadership for South Africa's business community.
South Africa's mining industry has been in a steady decline for the past 20 years as its international competitiveness has waned.
Among key interventions highlighted in the report are, providing policy certainty, strengthening security of tenure, improving the mineral rights application process, and updating geological mapping.
Hans Kuipers, a BCG partner in the Johannesburg office and one of five co-authors of the report, also said South Africa needs to improve financing vehicles because there is a dearth of capital available for riskier exploration activities.
Kuipers said South Africa can learn from nations such as Canada, which uses Flow Through Shares (FTS) to encourage investment. FTS allows corporations to pass on exploration expenditure as a tax-deductible expense to shareholders.
"We believe new incentives should be created to facilitate investment in exploration," Kuipers said.
The BCG also identifies interventions such as focusing on infrastructure and logistical bottlenecks, reducing utility costs, negotiating sustainable wage agreements and improved implementation of social and labor plans, improving technological competitiveness, and stimulating domestic and international demand.
"We believe that the current positive sentiment in the country has opened a window of opportunity for more constructive engagement among key stakeholders, but the right mindset for collaboration and decisive action is necessary to improve the sector's competitiveness and achieve higher growth," Kuipers said.
"Mining remains an industry of opportunity and challenge. And if government, industry, and organized labor work together, it will be entirely possible to reverse the sector’s fortune and drive the growth it is capable of."