International law firm Eversheds believes major contributors to the loss of foreign direct investment (FDI) in South Africa’s mining sector, such as nationalisation talk, inadequate infrastructure and the proposed amendment of the Mineral and Petroleum Resources Development Act (MPRDA) of 2002, will be major topics at this year’s Investing in African Mining Indaba.

The event, scheduled for February 6 to 9, in Cape Town, is expecting about 6 500 attendees from over 100 countries to network and hold discussions that are focused on African mining.

Eversheds commercial division head Warren Drue explains that the complex and inefficient regulatory regime governing South Africa’s mining sector is threatening mining investment in the country.

Further, he adds that, as a result, many foreign companies will rather consider South Africa’s competitors for mining opportunities.

“In South Africa, it can take many years to gain all the necessary approvals prior to constructing and operating a mine,” says Drue.

Other countries offer mining companies up to a year for the approval of mining licences, which, according to Drue, gives those countries a competitive advantage over South Africa, and impacts on the success of South Africa’s growth strategy.

Eversheds points out that a major cause of delay in receiving mining approval involves the need to apply for certain licences from different departments, which, Eversheds mining sector head Debbie Ntombela says, needs to be addressed by the Department of Minerals and Resources (DMR).

“A mining rights applicant in South Africa has to receive approval from the DMR, which takes about a year; the Department of Water Affairs for the water use licence, which takes two or more years; and the Department of Environmental Affairs,” she says.

The DMR is currently amending the MPRDA to create a more efficient regulatory regime.

Eversheds states that it would welcome a change in the approval process, where the appli- cation to mine is handled by a single department accommodating all the necessary licences, as opposed to three different departments.

Nonetheless, Ntombela says she is confident that recently appointed DMR director-general Dr Thibedi Ramontja will prioritise service delivery.

“Eleven mining applications that have been outstanding for a long period have been cleared by the new DMR director-general and I am confident that things will change in the department,” she tells Mining Weekly.

Meanwhile, the law firm notes that inadequate infrastructure, particularly rail and ports, is of concern to foreign companies and investors seeking to operate mines in South Africa.

“Even if companies get the necessary approvals, the difficulty in transporting goods to and from the ports and securing an export allocation at the ports is tremendously time-consuming,” says Ntombela.

Further, she says that, where minerals are readily available in competitive investment destinations, South Africa must consider streamlining processes to simplify conducting business in the country.

Drue describes the current port allocation problem as “a major concern”, saying the crisis experienced at ports and the lack of rail to transport goods sees an increased willingness by foreign investors to fund infrastructure development.

“The infrastructure dilemma has resulted in foreign companies pursuing public–private partnerships with government to assist the development of much-needed additional infrastructure,” he explains.

Another topic of debate at the Mining Indaba is nationalisation, which Drue says drove a significant amount of foreign investment away from South Africa. Other topics to be widely discussed are beneficiation and electricity supply constraints.

Eversheds will be attending the Mining Indaba, at the Cape Town International Convention Centre, where it will also exhibit the company’s services, while using the platform to engage in new business and contribute to the development of the African mining sector.

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