Local and global investors who are con- cerned about the long-term security of mining investment profiles need policy certainty, streamlined processes and mining consolidation to ease investment fears.

Specialist private-equity fund New Africa Mining Fund director Neil Gardyne believes that the South African government needs to streamline procedures in the mining industry, as they take too long to complete and, as a result, discourage investment.

“There is worry in the market that mining investment takes too long locally for adequate capital returns. The New Africa Mining Fund had an investor who lodged an exploration permit for ore situated half in Botswana and half in South Africa. Botswana [issued] the permit in six weeks, while it took a year in South Africa. By the time the South African permit arrived, the company had already finished exploration in the Botswana half. Arduous procedures and red tape are not conducive to mining investment. After all, time is money,” he comments.

He says South Africa has the ore deposits but government needs to focus on infrastructure and faster turnaround times if it wants to attract investors. Equity and beneficiation need to happen to address the imbalances of the past, but there also needs to be a balance for mining capital to make the sector work.

“Policy uncertainty and labour unrest do not create an environment conducive to investment in this country. Government needs to do more to create a more encouraging environment for investment otherwise the mining sector will look to more stable climates to invest. Look at gold mining company Gold Fields – they have bought another mine in Australia and sold some off in South Africa,” comments Gardyne.

He says this trend could pick up pace if major players do not act now and work together to create policy certainty, faster mineral rights processing and a more stable environment conducive to long-term mining investment for the sustainable benefit of all in South Africa.

Mine risk company Eunomix MD Claude Baissac says, legislative instability, regulatory discretion, lack of transparency and slow procedures in the mining industry are symptomatic of a bigger problem.

“Government calls for public engagement but cannot accept they might be wrong, even if proven to be so. Any citizen or com-pany that publicly criticises the State is attacked and harshly rebuked by government. There is always this notion that government knows best. This is despite the fact that [there is a] crisis in mining because the economic reality does not comply with State ideology,” he comments.

Baissac says the current government eco- nomic policy is increasingly resembling the State capitalism model of the old National Party but what is really needed is more liberalisation of the economy to fuel growth.

For example, he sees the State parastatals not playing a developmental role because there are no developmental prices to fuel growth nor do prices play a capitalistic role in the form of increasing competition in the marketplace to help drive down prices and create a more business-friendly growth environment.

“Parastatals are not [playing] a capital or developmental role; they are caught in the middle of the river, unable to offer subsidised prices to consumers for growth or to compete in the open marketplace in a liberalised and open economy. There is a legacy of collusion and cartels in the market and what we need is more competition, not more control,” says Baissac.

To liberate South Africa’s growth potential, government needs to reinforce a competition economy and, through this, encourage the private sector to unlock cash reserves it is holding onto in the face of policy uncertainty, he concludes.