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South Africa could create 50 000 more mining jobs – Minerals Council

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South Africa could create 50 000 more mining jobs – Minerals Council

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Minerals Council South Africa CEO Roger Baxter
Minerals Council South Africa CEO Roger Baxter

30th August 2018

By: Martin Creamer
Creamer Media Editor

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JOHANNESBURG (miningweekly.com) – A South Africa moderately more attractive to investors would catalyse the creation of 50 000 more mining jobs and an additional 200 000 jobs overall, Minerals Council South Africa CEO Roger Baxter told the Africa Down Under conference in Perth on Thursday.

Speaking a day after Mineral Resources Minister Gwede Mantashe announced a R20-billion, ten-year plan to boost exploration spend in South Africa, Baxter noted that, even in the absence of exploration, South Africa’s mining business had massive latent promise.

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“South Africa’s mining potential is huge. Even in the absence of a greenfields exploration boom in South Africa, mining investment could almost double in the next four years if the country was to return to the top 25% of the most attractive mining investment destinations worldwide,” Baxter told the conference attended by Creamer Media’s Mining Weekly Online.

Output, exports and procurement would increase substantially, as would direct and indirect taxes, and royalties paid to the fiscus; and the mining industry would be in a better position to increase its contribution towards infrastructure development and social projects in mining-affected communities.

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“Given the industry’s commitment to real transformation, this would also materially advance the entire country’s transformation agenda,” said Baxter, who pointed out that in recent years South Africa had not realised its significant mining potential.

In 2017, South Africa was rated forty-eighth out of 91 mining jurisdictions in the Fraser Institute’s mining investment attractiveness rankings, despite being ranked twentieth out of 91 for the country’s mineral potential assuming best policy and regulatory practice.

South Africa’s mineral policies were ranked 81 out of 91 jurisdictions, and clearly there is a mismatch between the mineral potential and the policy scorecard. The consequences are evident with real net capital formation in mining declining by over 50% between 2013 and 2017.

South Africa accounted for a poor 1% of total global exploration expenditure in 2017, compared with 14% for Canada and Australia and 13% for the rest of Africa.

Issues undermining the competitiveness of South Africa’s mining and exploration sectors are mainly policy and regulatory uncertainty, costs rising at rates well above inflation, infrastructural constraints, restraints on exploration, a lack of trust between stakeholders and corruption.

Baxter called for a shared future mining vision, ethical leadership and good governance, policy and regulatory certainty and competitiveness, available, efficient, cost competitive and reliable infrastructure, improved productivity and competitiveness, and a greenfields exploration boom.

“Encouragingly we have seen a number of positive developments in the right direction. Since February, the  administration under President Cyril Ramaphosa had implemented measures to tackle corruption and promote investment,” he said, describing as positive the appointment of Mantashe and new measures to stabilise State-owned enterprises.

Since his appointment, he said Mantashe had worked hard to overcome the trust deficit between stakeholders by engaging all parties in a frank and open manner.

He praised the Minister for withdrawing the problematic Minerals and Petroleum Resources Development Act Amendment Bill and for proposing talks on individual commodities to address their specific challenges.

Positive outcomes of the detailed discussions on the new Mining Charter included recognition of previous empowerment transactions.

“While some issues remain in respect of the new charter, we are hopeful of an outcome that promotes both transformation and investor confidence, which will ultimately ensure the growth and viability of our sector,” said Baxter.

However, he cautioned that there was still much more work to be done to develop a competitive growth strategy for the mining sector and to assist some commodities through the specific economic challenges.

“What is important is that stakeholders are working together and the processes are certainly pointing in the right direction,” he concluded.

With government also considering specific tax incentives on exploration projects, Mantashe has told the conference of his government’s planned dedicated focus on assisting junior exploration and mining companies to gain access to finance.

The Minister told Mining Weekly Online that the Council for Geosciences should also be equipped to more proactively assist explorers in finding resources, with the capacity and capability of pointing explorers towards known deposits.

The exploration drive would be geared towards the discovery and quantification of a new minerals pipeline not only comprising South Africa’s historical commodities like gold and platinum, but also targeting other minerals like fluorspar, for example.

In addition, the Department of Mineral Resources would also be looking at initiatives to lower the cost of doing business, including commodity linked electricity pricing, rail and port costs, as well as ramping-up investments by the State into rail and port capacity.

Mantashe identified the high cost of electricity as a factor that was inhibiting growth and forcing some South African chrome and manganese mining companies to add value to the metals in countries that provided cheaper electricity.

If the high electricity price were dealt with, more of this raw material could be beneficiated in South Africa.

The Minister revealed the government was considering the introduction of commodity price-linked power pricing and a dedicated manganese ore rail line from the Northern Cape to the Port of Saldanha. 

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