SA was placed 74th out of 104 global mining jurisdictions in a Fraser Institute survey. It was overtaken by countries such as the Democratic Republic of Congo, while Zambia romped back into the top 50, as SA’s regulatory uncertainty and labour issues continued to weigh on perceptions about the country.
Perceptions of SA worsened in 2016 in a survey sent to 2,700 mining managers and executives across the world.
SA had risen to 66th out of 109 a year earlier.
The country has been mired in regulatory uncertainty since 2012 when amendments were drafted to the Mineral and Petroleum Resources Development Act.
They are yet to be finalised. The third iteration of the Mining Charter has drawn fierce criticism from the mining sector.
Mineral Resources Minister Mosebenzi Zwane said in February the charter would be gazetted by the end of March and finalised before June.
"On policy perception alone, ignoring geology, SA now ranks as the third-least attractive mining jurisdiction in Africa, followed by Zimbabwe and South Sudan. This is obviously concerning," said Peter Leon from Herbert Smith Freehills.
"It is clear that it is becoming increasingly urgent for the government to provide the necessary regulatory certainty for the mining industry. It can begin to do so by resolving its protracted dispute with the Chamber of Mines over Mining Charter III and reconsidering the (mining) amendment bill," he said.
The attractiveness index combined a policy perception index, in which SA ranked 84th out of 104 jurisdictions compared to 78th out of 109 the previous year, and a best-practices mineral potential index.
In the mineral potential index , a pure geological measurement. SA ranked 64th last year and 51 the year before, both a far cry from 2013 when SA was ranked 37 out of 112 jurisdictions.
"There is a grave risk to ownership with the government’s track record on passing and then modifying laws to achieve policy goals. The environment in SA is not predictable," the report quoted an unnamed consultant as saying in a response.
In a survey question regarding labour regulations, employment agreements, labour militancy and work disruptions SA was third last, above Zimbabwe and last-placed Venezuela.
“The Fraser Institute’s annual survey, though well known, uses a methodology of seeking subjective opinions which many consider not to be helpful. With that limitation, we note SA’s fairly consistent ranking compared with recent years, though the “attractiveness” score has declined to 2012 levels, which was not a good year for SA mining,” said Chamber of Mines CEO Roger Baxter.
“We have often in recent times spoken of the need for regulatory certainty on a mutually acceptable basis, particularly in respect of the amendments to the MPRDA, the Mining Charter and, for example, implementation of safety regulations. Such developments would be good for industry and investor confidence. A likely consequence would be an improvement in the Fraser Institute ranking, though this of course would not be the main purpose of achieving these goals,” he said.
The Fraser Institute, which is based in Canada, said the survey was informal but was a useful tool for governments and mining companies.
The survey attempted to “assess the perceptions of mining company executives about various areas of optimal and sub-optimal public policies that might affect the hospitality of a jurisdiction to mining investment,” the institute said.
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