JOHANNESBURG (miningweekly.com) – Governments that have implemented positive policy changes, such as the Democratic Republic of Congo and Zambia, have contributed to exponential growth in the mining production of their countries in the last ten years, but South Africa is lagging far behind, Cadiz Corporate Solutions head of mining Peter Major said on Wednesday.
“We haven’t had a policy change here since 1994, which will keep pushing our production down, which does not make it a good investment destination,” he noted during a panel discussion at Deloitte’s Africa Outlook 2017.
Major further pointed out that investors were looking at cash-generating assets, more than greenfield projects. “Yes, they want existing projects, but most of all they want policy . . . this is more important than anything else by far, more than commodity prices, orebodies and infrastructure.”
Meanwhile, consultancy firm To the Point founder and industry stalwart Bernard Swanepoel added that mining companies took too long to adjust to the drop in commodity prices. “In some cases, the delayed action by mining companies prevented government from realising how big the problem is.”
He further pointed out that, currently, the local industry was appointing “a few hundred thousand people more than is economically viable in our gold and platinum mines”.
However, JSE commodities derivatives director Chris Sturgess pointed out that, even with the correct policies in place, getting the full benefit thereof also depended on correct timing.
“[Governments are tempted] in a commodities boom to also get a piece of the pie. What we have seen over the last few years, preceding the drop in commodity prices, were governments that were looking at how to get more out of this pie, where policy decisions have flown out, but the timing was wrong,” he noted.
Sturgess further pointed out that policy and commodity pricing challenges were not only confined to the mineral resources sector, but were also an issue in the agriculture sector, particularly when it came to food security. “However, the correct open policies in agriculture have allowed for free trade and stimulated production,” he said.