TORONTO (miningweekly.com) – The Johannesburg Stock Exchange (JSE) is still by any measure a world-class stock exchange, and should be the mining mecca of the mining industry, Sasfin Capital head of corporate finance Noah Greenhill said this week.

Speaking to Mining Weekly Online in his capacity as official JSE representative during the Prospectors and Developers Association of Canada’s recent convention, Greenhill pointed to several of the exchange’s strengths, such as well established regulations, excellent clearing and settlement systems, and plenty of available capital in South Africa - once a mining investment powerhouse.

The latest World Economic Forum 'Global Competiveness Report' ranked South Africa first out of 148 countries for regulation of securities exchanges for the fourth consecutive year. This, together with several other elements of the report, pointed to the country’s exchange as a sound environment in which to invest.

“It’s a no-brainer. It is not that there is no capital for investment, there is rather a lack of the propensity to take investment risk,” he said.

Greenhill, who used to be the JSE's marketing and development head, said that before South Africa became a free society in 1994, when the separatist minority government’s apartheid regime fell, almost all exploration investment was borne by big multinational miners, which paid for it out of pocket.

However, once the Mineral and Petroleum Resources Development Act came into force, with its ‘use it, or lose it’ stipulations, many more assets became available on the market.

The problem, he explained, is that South Africans have a very low tolerance for risk, hence the comparatively lower investments in the mining sector on the exchange.

However, JSE mining investment was by no means dying, as the exchange had about R2.4-trillion (about C$247.9-billion) in mining stocks on its books at the moment, several big mining names such as AngloGold Ashanti, Gold Fields, Harmony Gold Mining and DRDGold counting among its issuers.

Greenhill said that Canadian investors and those from elsewhere in the world, such as in Europe, the East and Australia, were much more acclimatised to riskier investments through the help of government initiatives such as Canada’s flow-through shares, that provide investors with tax incentives to make equity investments in junior explorers.

Canada has nearly 1 700 mining and junior mining companies listed on the TSX and TSX-V. Together, they are responsible for about 90% of the world’s equity financing by number and nearly 40% by value.

“It is all about education. The industry should drive investment education in partnership with government to encourage investment in the resources ad mining sectors. Perhaps the JSE should also look at initiatives to make risk more attractive,” he said.

Greenhill also said that increased coverage by analysts and the media could also spur investment in the JSE’s miners.

“The whole South African mining industry, including government, companies and analysts have the responsibility to attract more listings for the right reasons. It makes absolute sense for companies with assets in South Africa to list on the JSE.

“The alternative to not doing anything is not contemplatable,” Greenhill said.