Good mine prospects for South Africa, but investor environment needs attention

25th November 2011 By: Jessica Hannah

South Africa needs to make itself more attractive to mining investors, independent political analyst Daniel Silke said at explosives specialist BME’s nineteenth conference.

He believes that there are huge opportunities in the commodities sector, as there is significant demand for resources from Brazil, Russia, India, China and South Africa (the so-called Brics nations), which is further driven by the increased development of infrastructure.

South African commodities were in a super cycle and government had the ability to facilitate growth. Government’s role would be crucial to the country’s development, said Silke, who foresees increased stability in commodities prices.

“Being part of the Brics grouping has enormous benefits as it opens new markets for business and the country can learn international best practice on how to build the best economy,” he said.

Meanwhile, Silke noted that the eurozone was becoming more stagnant, which curbed demand, and this might result in a growth slowdown across the Western world.

However, with the stagnant eurozone, there was an emergence of significant interest that would be seen in business coming from the Brics markets. “We are seeing increased demand in resources owing to increased population growth, which has also resulted in increased demand for trans- parency, accountability and regulations.”

He stated that the world was undergoing the most important shift in global power to the Brics countries in economic and geo-political areas, where growth and decision-making were being driven by the emerging powers.

“There is also a significant amount of opportunities in Africa,” said Silke.

By 2050, one-quarter of the world’s population will live in Africa and growth is expected to be significant. Already, seven out of ten of the fastest-growing economies are African.

Further, Africa is rich in mineral resources and holds 60% of the remaining crop land in the world. This has resulted in the buying up of land in Africa as the world braces itself for food shortages.

“This is a very real factor, which needs a lot of consideration. The world population is currently at seven-billion people and, by 2050, it is expected to reach nine-billion people.”

Food, water and commodity or resource shortages will become key social and political concerns.