Uncertainty can hinder investment potential – law firm

An image depicting a smiling man, Otsile Matlou

OTSILE MATLOU ENSafrica is sending its partners as delegates to the Mining Indaba to engage with industry players on pertinent issues

27th January 2023

By: Sabrina Jardim

Creamer Media Writer


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The theme of this year’s Investing in African Mining Indaba – Unlocking African Mining Investment – is quite relevant, as uncertainty in the South African mining industry can create reluctance among investors, says law firm ENSafrica COO Otsile Matlou.

He explains that there are three main hinderances that create regulatory uncertainty – the first being ambiguity around what constitutes law in the local industry, owing to continuously changing regulations.

Matlou cites the example of the 2008 amendments to the Mineral and Petroleum Resources Development Act, some of which were put into effect in 2013, and others which remain inoperative.

Moreover, whereas the Mining Charter was previously enforced as law, the court has now ruled that it is a guideline.

“This begs the question: what are the legal requirements regarding transformation of the mining industry and empowerment of previously disadvantaged South Africans?” asks Matlou.

Secondly, the capacity of the Department of Mineral Resources and Energy (DMRE) to regulate the sector remains a big issue. It has in fact worsened over time, owing to a loss of talent and inappropriate political appointments.

“As the administrative heart of the industry, the DMRE needs to be consistent and when you have constant changes, it undermines continuity and governance,” warns Matlou.

The rise of populism also creates uncertainty, with renewed calls for resource nationalism. These can also hinder investment for the local industry, with Matlou noting that the government policy is unclear about the extent of State participation in the mining industry.

The African National Congress (ANC) rejected calls for resource nationalism in South African mining in 2012, and Matlou remains confident that the ANC will not change its stance, since the balance of evidence shows that resource nationalism can be a major hindrance to economic development.

“You may hear some in the ANC talking about it, but I don’t believe the ANC will adopt resource nationalism as a policy,” Matlou states.

He adds that, while South Africa has many operating mines, very few new mines are being commissioned as a result of uncertainties in the industry, leading to a lack of exploration projects coming on stream which, consequently, hinders investment.

Hence, ENSafrica is sending its partners as delegates to the Mining Indaba to engage with industry players, such as politicians and mining leaders, on pertinent issues, emphasising the importance of partnerships in the mining industry among mining companies, stakeholders and government.

Matlou notes that establishing partnerships in the industry is necessary to help foster all elements of environmental, social and corporate governance (ESG), and the firm will contribute towards discussions on ESG initiatives and on the role of mining in the energy transition.

“The biggest challenge facing the country is energy related and, for the energy crisis to be resolved, mining is going to be at the heart of the solution. So I am looking forward to hearing what the thinking is around those issues,” says Matlou.

He explains that ENSafrica intends to help ensure the sustainability of the mining industry during the energy transition by supporting its mining clients as they decarbonise their operations.

Further, the Mining Indaba provides an opportunity to showcase the firm as a thought leader, with ENSafrica having partnered with workflow solutions provider LexisNexis in publishing two leading health and safety publications, one dedicated to the mining industry and the other dedicated to occupational health and safety issues more generally.

The firm will also host a networking lunch with mining companies during the Mining Indaba to address topical issues.

Moreover, as an African law firm, ENSafrica hopes to highlight the tourism potential of Cape Town, in the Western Cape, by showcasing the city to international clients and law firms.

“At the end of the Mining Indaba, we hope that the industry will have engaged in South Africa’s and Africa’s commitments to ESG and the just energy transition, and will have committed to making sure that the industry is governed properly from a legislative framework perspective and that regulatory uncertainty is removed,” concludes Matlou.

The Mining Indaba will be hosted at the Cape Town International Convention Centre from February 6 to 9.

Edited by Nadine James
Features Deputy Editor



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