Every Friday morning, SAfm’s AMLive’s radio anchor Sakina Kamwendo speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly.  Reported here is this Friday’s At the Coalface transcript:

Kamwendo: South Africa has plummeted to an abysmally low level in the World Bank’s 160-country cost-of-doing-business rankings.

Creamer: This is not great at all. The World Bank has this Doing Business publication and in 2007 we occupied a fairly good position in this, but have since tumbled on just about every metric. Overall now we are at 73^rd position, 15 notches down from where we were.

They look at things about the fitness for a country to grow and be competitive. They also look at issues as to how long it takes you to start a business etc. On starting business, we have fallen 61 notches down to 120^th position. Registering a property, we have also fallen. It is only really on securing investments at the Stock Exchange and doing cross border trade that we have done fairly well. It is all around this issue of policy risk and regulatory risk.

It is self-inflicted and it is not as if they are saying that our policies are bad. In many instances the policy is on limbo so that shows terrible inefficiency of government. Just looking at our national heritage how we could do better in mining, that is stuck because mining itself has a whole lot of issues. It is long term to production, you don’t get your return quickly.

This was raised by the Chamber of Mines (CoM) this week that we really need proper policy in order to get the investment. They looked at the Fraser Institute, we are in 81^st position there now of 1 600 respondents, well over two thirds gave us a serious thumbs down for any investment here.

They are just pointing out that it is still the issue of the mining legislation, the main MPRDA, the amendments to that were published in December 2012, so we are waiting nearly four-years and it is still left in limbo. On top of that you have got tax legislation that is changing, you have got carbon tax coming up and labour laws being amended. That uncertainty means that people hold back and they don’t invest.

They were just talking about how long you need for investment. They were looking at Shaft 16 investment at Impala Platinum. It has taken like two decades to get his out. If they knew the policy uncertainty now, they probably would never have gone ahead with it. There it is 7 500 jobs and a lot of value for South Africa.

Kamwendo: Fundamental calculations of risk are putting South Africa behind countries like the DRC as an investment destination.

Creamer: This was put forward by Prof Michael Solomon of the University of Cape Town.  He was saying that there is a fundamental measurement that investors use called the weighted average cost of capital (WACC). It is unemotional and they just look at your country and start measuring and saying if the country is worth an investment.

He says that we are falling so far behind now that they see us below the Democratic Republic of Congo and many African countries, including Mali and Burkina Faso. He says that countries which should have and do have perceived high cost structures like Canada and Australia, they are seen as better cost destinations then we are, because of what he says is fundamentally the need for stable policy and clean leadership.

If you don't have those two you really start falling behind. You can say as much as you like, like governments, do that we have fantastic natural resources here, our gold ore is incredible. They won’t listen to you, because they can go to Latin America, North America and Canada as we saw De Beers opening a big operation in Canada this week.

They are doing work here as well, but would they have invested in the current climate? Perhaps not. This is all around self-inflicted damage that South Africans are putting on themselves.

Kamwendo: Developing mine heritage sites has payoff potential for the Gauteng economy.

Creamer: Gauteng in Sotho means ‘Place of Gold’. People refer to Johannesburg in Zulu as Egoli, the ‘City of Gold’. But, where is there any heritage site besides perhaps Gold Reef City where you reflect this in a tourism sense.

The International Council of Mining and Metals too which many of our big mining groups belong are saying that make use of this and see it as sustainable development. Instead, out at Langlaagte where we should have a great heritage site, because 130 years ago that is where George Harrison stumbled over that outcrop and found the biggest gold find in the history of the world.

We produced half of the world’s gold. Instead of having tourists there we have got desperation and death, because our zama zama’s are taking advantage of that situation because nothing is being done there.

That monument is derelict and we could see that there is money to be made and jobs to be created in actually developing our heritage sites, which are there for us to exploit.

Kamwendo: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly.