The changes made to SA mining regulations pushed it up the policy perception rankings in the Fraser Institute survey of mining jurisdictions, returning it to 2014 levels, before Mosebenzi Zwane became mineral resources minister.
In the latest survey of mining and exploration companies in the closely watched Fraser Institute survey of perceptions of mining jurisdictions, SA posted a notable improvement in its policy perception index compared with the previous three years, when the country was wracked by regulatory uncertainty.
In a survey compiled from 291 responses to the 2,600 questionnaires sent, the Fraser Institute evaluated the perceived attractiveness of 83 jurisdictions. This was the lowest number of jurisdictions in five years of data provided in the survey, which has fallen from 122 in 2014.
For SA, the recovery in the policy perception index is an indication of the changes wrought by Gwede Mantashe since he became mines minister at the end of February 2018, replacing the deeply unpopular Zwane, who the Minerals Council SA’s executives said had unresolved allegations of corruption hanging over him and did not have the industry’s best interests at heart.
Zwane, a lowly provincial MP in the Free State and the agriculture MEC in the province, unexpectedly replaced Ngoako Ramatlhodi in September 2015, a decision by then-president Jacob Zuma that was widely seen as putting a pliable minister in charge of a portfolio from which favours could be dispensed.
Zwane was linked to the pressure brought to bear on Glencore to dispose of its Optimum colliery to the Gupta family, close associates of Zuma, and visited the commodity trader’s CEO, Ivan Glasenberg, in Switzerland with a Gupta delegation to make the case for the sale.
Mantashe, on assuming office, immediately began a process to renegotiate the third iteration of the Mining Charter, which governs the racial transformation of SA’s mining industry.
Zwane gazetted his version of the third charter in June 2017. The document immediately knocked R51bn off JSE-listed mining companies’ capitalisation and was challenged in court by the council, prompting Zwane to suspend the charter.
Mantashe gazetted the new charter in September 2018. While the industry still has one or two areas of deep unhappiness with the charter, it is generally acknowledged as a vast improvement on Zwane’s version.
Mantashe also scrapped amendments to the Mineral and Petroleum Resources Development Act, which had been in the works since 2012 and were a cause of uncertainty.
By his actions of trying to undo the damage done by Zwane, Mantashe has pushed SA’s policy perception index back to the same relative levels as it was in 2014.
In the 2018 survey released on Thursday, SA improved to 56 out of 83 jurisdictions from 81 out of 91 in the previous year.
In 2014, SA ranked 83 out of 122 jurisdictions.
In the catch-all investment attractiveness index, however, SA improved only marginally to 43 out of 83 jurisdictions from 48 out of 91 the previous year.
In the investment attractive index, policy was given a 40% weighting, while mineral potential was weighted 60%.
“Perception surveys are important because they help us understand what people are thinking,” said Paul Miller, the head of Concentrate Capital Partners, a private equity company.
“But ultimately it is money that does the talking. How much actual investment is happening in greenfield exploration? A mining industry has no long-term future if exploration rigs are not turning and that requires real mining being invested,” he said.
In Africa, Botswana and Namibia rated the highest on the policy perception index, ranking 12 out of 83 and 36 out of 83 respectively.
At the top of the investment attractiveness was Nevada, which moved up from third spot in 2017. At the top of the investment attractiveness was Nevada, which moved up from third spot in 2017. Nevada is one of the jurisdictions in which AngloGold Ashanti has an exploration programme.
Explaining the survey, which has been undertaken since 1997, the Fraser Institute said: “Our purpose is to create a ‘report card’ that governments can use to improve their mining-related public policy in order to attract investment in their mining sector to better their economic productivity and employment.”
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