Minerals Council South Africa CEO Roger Baxter
The Minerals Council South Africa says it is “deeply disappointing” that South Africa now ranks, for the first time, among the world’s ten least attractive mining destinations globally, as per the latest Fraser Institute Annual Survey of Mining Companies.
The council says it serves as a warning that the country is heading in the wrong direction when it comes to attracting investment in the resources sector.
The survey, which is sent to more than 2 000 exploration, development and other mining-related companies around the world, aims to assess how mineral endowments and public policy factors, such as taxation and regulatory uncertainty, affect exploration investment.
South Africa slipped sharply down the ranks when measured in the Investment Attractiveness Index (IAI), falling to seventy-fifth out of the 84 jurisdictions surveyed in 2021.
This compares with a position of 60 out of 77 countries in 2020 and a position of 40 out of 76 in 2019. South Africa ranks twelfth out of 15 African jurisdictions in the IAI.
The IAI is derived from combining a Best Practices Mineral Potential Index, which rates regions based on their geological attractiveness, and a Policy Perception Index – a composite index that measures the effects of government policy on attitudes toward exploration investment.
Respondents to the Fraser Institute’s survey have consistently indicated that about 40% of their investment decision is determined by policy factors and 60% by mineral potential.
The Minerals Council says the 2021 ranking of South Africa on the IAI is the worst since 2009, but admits that the country has been consistently in the bottom half of the rankings since then.
“It is worrying that the trend remains downward rather than stabilising or improving. We must revitalise our efforts to address the underlying challenges informing this trend,” states CEO Roger Baxter.
The backlog of more than 4 000 mining and prospecting rights, as well as mineral right transfer applications within the department, is of major concern to the Minerals Council, as is the slow progress to replace the failed South African Mineral Resources Administration, or Samrad, cadastral system with a modern, transparent, corruption-free online system.
“Both these issues are curtailing much-needed investment in exploration and the development of the mining sector,” Baxter notes.
He affirms that the council is working closely with officials in the Department of Mineral Resources and Energy, and the Presidency, to address the many challenges mining companies are facing.