"Process" is underway - SA mines minister

SA mines minister, Susan Shabangu, said the decline in Fraser rankings is "not a surprise", but it is working to solve the problems

In response to queries, South African mines minister Susan Shabangu has issued a statement on the just-published Fraser Institute on global mining, where she states that the country's 2010-2011 ranking at 67, of 79 jurisdictions, is "not a surprise".

The report, compiled from responses from nearly 500 mining executives around the world, puts South Africa just ahead of jurisdictions such as Zimbabwe, Democratic Republic of the Congo, and Venezuela. Over the past five years, South Africa's position has fallen from 37 to 67. The survey, now in its 14th year, is aimed primarily at governments as an indicator of comparative competitiveness.

Shabangu explained that "We had already identified a number of challenges and gaps in our regulatory framework and we have said as much. Consequently, there is a process underway to address these ambiguities in law and other areas of weaknesses".

Several well-publicised mining disputes broke out into the pubic domain over the past year, in particular, headed by the case involving Kumba Iron Ore, a subsidiary of Anglo American, the transnational miner, and a shell company known as ICT.

The Fraser Institute survey's main findings are aggregated from nearly 20 sub-rankings, including "uncertainty concerning the administration, interpretation, and enforcement of existing regulations", where South Africa placed 60/79. On "legal processes that are fair, transparent, non-corrupt, timely, and efficiently administered", the placing was 62/79, and on "uncertainty concerning disputed land claims", 64/79.

Shabangu said that "on the environmental front, we are also alive to the fact that we need to harmonise our various legislations so that the entire experience of potential investors is positive". On "uncertainty concerning environmental regulations", South Africa scored 36/79, its highest single placing.

Shabangu said that the new cadastral online licensing system is partly designed to address some of the challenges reflected in the report. "We are well on our way", she said, "to streamlining our administrative processes for licensing, allowing us to reduce the prescribed turnaround time for prospecting and mining rights applications by half. The new system allows for consistency, transparency, accountability, and introduces uniform application and licencing evaluation procedures."

Shabangu is departing on a roadshow to address investors in Canada and the US and that that "this is the message" she will be taking to potential investors. The delegation includes captains of industry as well as labour, and will coincide with the opening in Toronto on Monday of PDAC, the world's biggest mining conference, where more than 20,000 delegates are anticipated.

Shabangu said that "in spite of and despite the challenges that we face, we believe South Africa has a lot to offer. We are open for business and are working hard to deal with areas that have been identified in our engagement with business and labour.

"In a few years, we do believe we will be ranked higher because we are addressing all the areas of weakness. But it is not only about ranking, but also the belief that the mining industry has the potential of creating more job opportunities and lift our people from the morass of poverty".

The Fraser Institute survey also includes sub-rankings that can be described as beyond the remit of a mining minister. On "labor regulations, employment agreements, and labour militancy or work disruptions", South Africa was rated a woeful 76/79.

On "growing (or lessening) uncertainty in mining policy and implementation", the rating was 71/79; on "trade barriers-tariff and non-tariff barriers, restrictions on profit repatriation, currency restrictions, etc", the rating was 70/79, and on "socioeconomic agreements/community development conditions", the score was 66/79.

While the ANC, the ruling party, has stated that nationalisation is not part of its policy, it has appointed a study group to look at the subject, following years of mutterings by the ANC Youth League. Some eyebrows have been raised, as well, at the government mining company, which officially launched last weekend.

South Africa is also one of the few countries in the world to still maintain capital controls on currency transfers, and obliges all mining companies to ensure by 2014 that 26% of equity is owned by "black economic empowerment" entities. There are also extensive equity, procurement and related obligations.

A senior Johannesburg-based mining CEO yesterday said that the three biggest worries facing the domestic sector were security of tenure, challenges over long-term infrastructural issues such as power and water supply, and a dire lack of skills.

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