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OP-ED: Mining success in Africa can only be measured by its success in South Africa

Jinghe Chen, Chairperson of the Zijin Mining Group.

Jinghe Chen, Chairperson of the Zijin Mining Group.

Published Feb 10, 2023


By Jinghe Chen, Chairman of the Zijin Mining Group

It’s no secret that mining is a big business in South Africa.

According to the Minerals Council South Africa, mining produced R878 billion ($50 billion) in exports, employed around 476 000 people, and contributed 4% of the country's GDP in 2022.

Yet, in the year ending in November 2022, according to the most recent StatsSA data, South Africa's mining output decreased by 9% year-on-year - making it the country's fifth consecutive year of decreasing mining output. To add salt to the wound, it fell to its lowest-ever ranking for mining investment attractiveness in the same year.

Mines in the country are facing increasing challenges amid a perfect storm of weakening business climates, failing infrastructure, regulatory bottlenecks, and a growing need for more investment and jobs.

The differences of the business climates to other mines in Africa are startling.

The Kolwezi Copper Mine in the DRC was the first copper mine constructed by Zijin and put into operation abroad.

The investment was made in 2014, and the mine officially launched three years later in 2017.

Since then, Kolwezi has produced more than 529 800 tonnes of copper, providing more than 2 000 jobs for local people. Taxes and dues contributions from the mine amounted to over $1 000 million.

Another DRC mine, the Kamoa-Kakula Mining Complex or “Kamoa Copper” as it is known, is a joint venture between the Zijin Mining Group, Ivanhoe Mines, Crystal River Global Limited, and the DRC government. It is anticipated to become the second largest copper mine in the world in the near future.

The investment was made in 2015, and the partnership was sealed in 2016.

Following “carbon peak and carbon neutrality” initiatives, Kamoa Copper implemented the Sustainable Livelihoods Programme and set a net-zero GHG emission target for operation. Kamoa Copper is powered by clean and renewable energy with its main power source coming from a hydropower plant and a hydropower facility. Total taxes and due contributions to date amount to more than $600 million.

Then there is the Bisha Zinc-Copper Mine in the State of Eritrea, with a total taxes and due contribution of approximately $300 million. The investment was made in 2019, soon after which it went into production. It has become one of the largest-producing zinc mines in Africa, with a mining and stripping capacity of 32 million tonnes per year and a processing capacity designed to produce more than 2.4 million tonnes per year.

In South Africa, Zijin first invested in the Garatau project in Limpopo in 2014. According to the Feasibility Study, the processing capacity of Garatau is anticipated to average 5.4 million tonnes of ore per annum once full capacity is achieved in a few years. The life of the mine is estimated to be in excess of 29 years and once fully operational, it has an intention of employing some 2 500 people.

However, the mine was only able to begin surface development seven years later. Navigating through the maze of regulatory challenges was possibly one of the major contributing factors to the mine’s stagnation.

With the DRC and Eritrea mines succeeding and thriving even before the Garatau project could launch, nostalgia hits as it takes us back to our first earnest step onto the African continent with our initial investment in the Garatau project in 2014. It's not difficult to imagine that the mine would have already provided job opportunities and contributed to economic growth, if only it could have started operations earlier with adequate support received from stakeholders and regulatory authorities at the time.

For investments to thrive and be sustainable in South Africa, it will be crucial to lower entry barriers, advance economic reforms to enhance the business climate, combat infrastructure damage, enhance the regulatory environment and encourage competition.

Improvements to these issues will inevitably generate much-needed jobs, and guarantee stronger, more sustainable and more inclusive growth for all.

But it seems hope never strays too far.

According to findings of Brand South Africa's 2022 Global Reputation Study, South Africa is still at the top of investors' and exporters' minds in 13 different markets around the world.

Some 59% of respondents said they would invest in the nation from an investment standpoint; while 75% said they would do business with South Africa. These feelings are directly related to South Africa's reputation for being a business-friendly nation with low operating costs, enticing regulations, and a thriving entrepreneurial scene. The report also shows that natural resources are the key factors influencing foreign investment and export reputation, which speaks highly of the strength and calibre of country's mining industry.

The mining industry in South Africa is the biggest, most diverse, and most established in all of Africa. South Africa has accumulated significant knowledge in mining and mining-related supply industries, and is home to numerous businesses at the cutting-edge of technology.

The industry still has the potential to become, once again, the main driving force behind the development of Africa's most advanced and richest economy.

Given the country’s economic standing as currently the world’s largest PGM producer, its significant role in Africa, and especially the challenges that international investors may face in South Africa, then to a certain extent, mining success in other parts of Africa is not true success. Only when there is a success in South Africa, would this mean true mining success in Africa.

* The views expressed do not necessarily reflect those of IOL or Independent Media.