The South African Institute of Race Relations (SAIRR )said this week that South Africa had become significantly less attractive as a mining investment destination since 2006.

Allan Reid, Director in the Corporate and Commercial practice at Cliffe Dekker Hofmeyr business law firm, comments, “The results of the research done by the South African Institute of Race Relations echo the sentiments being expressed by numerous of its local and international resource clients. South Africa’s slide to 67th out of 79 countries surveyed last year by the Fraser Institute annual survey of mining companies should come as no surprise. The year before, South Africa was ranked at 61 out of 72 countries surveyed, but there was at least industry optimism that matters would improve,” he says.

Reid notes that this optimism was based on the expectancy that the consultative process between government, organised labour and industry players through the Mining Industry Growth, Development and Employment Task Team (Migdett) would help to resolve issues such as the reform and consistent application of legislation, violent and frequent labour unrest, labour supply and skills, the delays experienced in the processing of applications for mining and prospecting rights and the implementation of the policies adopted in the ‘Strategy for the Sustainable Growth and Meaningful Transformation of South Africa’s Mining Industry’ document.

“Regrettably,” he says,” Migdett does not appear to have had much tangible success. Mining companies frequently find themselves at loggerheads with the unrealistic demands of the regulator. The amendments to South Africa’s mining legislation and regulatory framework were anticipated to have been finalised by late last year. This target is now late 2012, resulting in continuing uncertainty in certain significant areas of the law.

“The nationalisation debate has still not been resolved, although it is hoped that greater certainty on Governments stance on this issue will be forthcoming during this year’s Mining Indaba. The list of negative factors continues to grow.”

Reid adds that to an ever increasing extent, South Africa finds itself competing for mining investment with other African destinations.

“In addition, investment resources are becoming scarcer due to the ongoing Euro-crisis. Alternative markets in Canada, Australia, Asia and South America are expanding. South Africa has no option but to radically improve its image as a mining investment destination. The mining industry can only do so much. The burden for reform lies squarely on the shoulders of government.”

For more information:
Allan Reid, Director, Corporate and Commercial Practice, Cliffe Dekker Hofmeyr,
Tel: +27 (0)11 562 1222 or email: allan.reid@dlacdh.com

Andrea Collocott, Head: Marketing, Cliffe Dekker Hofmeyr,
Tel: +27 (0)11 562 1281 or email: andrea.collocott@dlacdh.com

Angela Graham, Tel: 073 505 9012 yeahwrite@worldonline.co.za

Notes:
Cliffe Dekker Hofmeyr is one of the largest commercial law firms in South Africa with some 115 directors/partners and 250 qualified lawyers located at offices in Johannesburg and Cape Town.

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Cliffe Dekker Hofmeyr's Africa practice, in conjunction with DLA Piper Africa Group, is unrivalled in terms of pan-African legal services and geographical coverage.

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