[miningmx.com] — JUST what does it mean to say that South Africa has lost R5bn/year in mining investment over recent years? And how on earth do we know? It may have made a good page one lead for a newspaper on a quiet news day, but we simply can’t take such sweeping statements at face value.
If an underpaid hack made such an assertion, his editor would want to know chapter and verse. But because the claim was made by Minerals & Energy director-general Sandile Nogxina apparently we must take it as gospel.
Just what are those huge investments we have lost? True, we know we could be exporting more coal if the railway line to Richards Bay could get it to the port. But there’s hectic activity in the platinum sector and it’s worth remembering that one company alone – Gold Fields – confirmed at its reserves presentation this month that it’s spending R25bn on expansion projects in South Africa, plus the considerable sums it spends on maintaining capacity.
And when Minerals & Energy Minister Buyelwa Sonjica said investment has been lost because many mines are located inland, she actually exposes the weaknesses in the argument. No mine is viable unless you can get the product to market. If you can’t do that economically it’s nonsense to say that not exploiting the resource is a “lost” investment: it never was an investment in the first place.
Having said all that, the minister and director-general deserve much credit for exposing some of the deterrents to mining development in South Africa, even at the cost of seeming to differ with government policy. The reference to the negative consequences of the policy of encouraging beneficiation in South Africa is the best example of that.
And while government may care to play down elements such as excessive regulatory requirements and lack of skills and infrastructure development, it’s clear from the proceedings at last week’s Mining Investment Strategic Workshop that there’s awareness that we have to some extent lost out on the commodities boom.
It’s reassuring to know that there are people in senior positions who realise that some of the obstacles to mining investment lie within government and appear determined to do something about them. However, the cause isn’t really helped by sweeping assertions – that can’t possibly be backed up – about the amount of investment we’re “losing”.
