South Africa has been the benefactor of an ongoing commodities’ boom for the past 20 years or so. However, some have expressed regret that the country has not been able to take full advantage of the boom.
This is due in part to bad policies that have resulted in dimmed investor appetite for the mining sector.
The higher tempo in the mining boom recently experienced has largely helped the government fund the nearly R40 billion socio-economic support programme announced by Treasury late last month, following the riots in KwaZulu-Natal and Gauteng.
But the mining sector tends to be a cyclical one, so the country can’t rest on its laurels that the good fortunes will last forever.
The National Treasury managed to provide substantial socio-economic support through its R36.2-billion package due, in large part, to receiving billions in taxes from the mining sector on the back of the commodity boom.
But there’s a feeling that South Africa has not fully leveraged this benefit, with analysts citing a bad mining policy and a lack of government-enabled investment in key areas like port and rail infrastructure.
“How do we take advantage of high commodity prices? You grease the rollers, you layout red carpets, and you get as many investors here as possible because we don’t have any money to expand our mines and to build new ones. Only foreigners do and they’re rolling in cash.” says Peter Major, Mining Director: Mergence Corporate Solutions.
Initially welcomed by the mining sector when he took over from Mosebenzi Zwane, it seems Minister of Mineral Resources Gwede Mantashe is now viewed as an impediment to progress in the industry, given his zeal to push through the latest Mining Charter, regardless of some of the sector’s objections to aspects of it.
Some say President Ramaphosa missed a golden opportunity to shuffle him out of the portfolio last week.
“He had a great opportunity to say I need a mining minister who has a track record and a plan on how to increase production, how to increase foreign investment and he didn’t do anything” adds Peter Major, Mining Director: Mergence Corporate Solutions.
Mining data for June was due out on Thursday, but Stats SA indicates that it didn’t receive the necessary data from the Department of Mineral Resources and Energy. A new release date is yet to be announced.
In the meantime, commodity prices appear to be coming under some pressure, partly on fears that the world is not getting a proper handle on the delta variant of the coronavirus. But then again, that fear could be short-lived.
In the video below is the report: