CAPE TOWN (miningweekly.com) – Industry leaders have said the tumble in the gold price, as well as concerns about the regulatory environment and tax regimes in gold-producing countries in Africa, have cranked up the pressure over the past year.

“After ten years of a bull market, the gold price dropped 17% last year, leaving the industry floundering in its wake. The gold industry in Africa is under real pressure and is responding by cancelling projects and cutting exploration budgets,” says Randgold Resources CEO Mark Bristow.

He told the Investing in African Mining Indaba, in Cape Town, on Tuesday that growing uncertainty about the regulatory environment and tax regimes in gold-producing African countries had led to diminishing confidence in the continent.

“Mining codes over the past few years have aggravated the uncertainty by creating the impression that governments of these countries want a bigger slice of the pie, but want to take it before the pie is baked.”

Despite stresses on both sides, Bristow said there were great opportunities for mutually beneficial partnerships between governments and mining companies.

He cited his experience in relatively unexplored Cote d’Ivoire, where Randgold Resources had invested in exploration.

“Cote d’Ivoire is opening up for new investment. We’re going big on exploration and building a portfolio of very promising Ivorian investments,” said Bristow.

He noted Cote d’Ivoire had some of the best infrastructure in West Africa and Randgold had developed trust and understanding with the local stakeholders.

At the Africa Ministerial Forum at the Indaba, the Cote d’Ivoire government was keen to draw investors, citing its good infrastructure as a base for mining – ranging from a network of more than 7 000 km of paved roads to its railway line crossing the country from south to north. 

Among other minerals, the country had deposits of gold, iron-ore, bauxite and manganese.

Anglo American executive director Khanyisile Kweyama also spoke about the pressures facing the mining industry during her presentation to the Mining Indaba.

She said increasing costs of oil, fuel and machinery, as well as rising taxes and royalties were having a heavy impact on the industry.

“Governments everywhere are seeking a bigger share of the mining pie, while other shareholders are demanding more from us.

“We are living in an era with many challenges affecting mining. We are seeing declining productivity and skills gaps.”

Kweyama said one of the challenges facing the industry was the negligible amount spent on research and development.

“Only 0.3% of mining revenues are spent on research and development. That is a damning statistic. The petroleum sector spends five times more on this.”

She called for “wholesale change” in the industry to convince the world of the necessity of mining for a sustainable future.