South Africa Miners Seek Policy Clarity to Boost Spending

JOHANNESBURG (Capital Markets in Africa) – South Africa needs to finalize its long-delayed mining regulations if falling investment in the sector is to be reversed, according to the Chamber of Mines, which represents producers.

Fixed investment in mining dropped in each of the past two years after growing at an average annual rate of 12 percent from 2001 to 2008 and 2 percent from 2009 to 2014, Chamber Chief Executive Officer Roger Baxter told reporters in Johannesburg on Wednesday. While the drop coincided with the commodities rout of 2015, spending will only rebound when investors have regulatory clarity, he said.

The government’s proposed new Mining Charter has yet to be published more than a year after a draft version was made public, while the Mineral and Petroleum Resources Development Amendment Bill has also not been finalized after President Jacob Zuma referred the bill back to parliament in early 2016. Miners including Sibanye Gold Ltd. have said new investment in South Africa is a tough sell to investors while uncertainty remains.

Mineral Resources Minister Mosebenzi Zwane joined with other government officials urging the need for “radical economic transformation” to more fairly distribute the benefits of South Africa’s economy among the black majority.

“Policy is key,” Baxter said. “The charter and the MPRDA are two key points that have to be sorted out quickly to enable investment to pick up again.”

The chamber’s outgoing president, Mike Teke, said the lobby group last met with the Department of Mineral Resources two months ago to discuss the Mining Charter. The government’s previous draft drew protests from the industry after it advocated regulations that would require many mining companies to cede large stakes to black investors, even if they had already done so in the past.

“Right now we are awaiting a response from the DMR and nothing has happened to date,” said Teke, who handed over the chamber presidency to Exxaro Resources Ltd. CEO Mxolisi Mgojo at the group’s annual general meeting on Wednesday.

The chamber is also seeking to improve mineworkers’ access to pension benefits, with almost 3 billion rand ($230 million) currently unclaimed by more than 100,000 former employees, Baxter said.