Prospect of mining business in SA

In five years, South Africa's rangking were continued to decline from 37 to 67 in the global mining survey, while the average score of Africa has not improved in the last 4 years.

South Africa ranks just above the bottom 10, which includes the likes of Venezuela, Zimbabwe, the Democratic Republic of the Congo, Bolivia and Madagascar. The Top Ten includes the likes of Quebec, Saskatchewan, Finland, Sweden and Nevada. Chile is the only developing country to regularly appear in the Top Ten; Botswana ranks as the top African country, just below the Top Ten.

The latest highly influential Fraser Institute Annual Survey of Mining Companies, now in its 14th year of publication, is based on responses from 494 mining companies, which reported exploration spending of USD 2.43bn during 2010.

During an era where "resource nationalism" is increasingly apparent across the world, the survey shows that Africa's average score has not improved in the past four years. African countries that scored well, after Botswana, include Namibia and Mali. Both Botswana and Namibia are South Africa neighbours.

At the other end of the scale, the further drop for the DRC, now ranking 77th overall, likely reflects, according to the survey, "the uncertainty created by the nationalization and revision of contracts by the [Joseph] Kabila government".

Fraser Institute: Survey of Mining Jurisdictions

			2011	2010	2009	2008	2007	2006	2005
Total jurisdictions			79	72	71	68	65	64	64
South Africa ranking:
Policy Potential Index			67	61	49	50	53	37	53
Mineral potential			66	45	44	45	57	27	37

The survey is based on the aggregate of 17 sub-rankings, such as "regulatory duplications" and "legal processes that are fair, transparent". On these measures, South Africa ranks only once in the top half on any single sub-ranking: 36 for "uncertainty concerning environmental regulations". Its lowest sub-ranking is at 76, for "labour regulations, employment agreements, and labour militancy or work disruptions".

South Africa ranked 71 for "growing (or lessening) uncertainty in mining policy and implementation", and 70 for "trade barriers", which includes currency restrictions.

One mining company executive was quoted in the survey as saying: "Botswana is pro-mining and has efficient bureaucrats, no corruption, reasonable and consistent regulations, and reasonable taxation. It has remained constant as other traditional mining friendly areas have moved away from supporting mining or simply become stupid".

Another executive said: "Democratic Republic of Congo has zero land tenure and less than zero certainty regarding political/permit certainty", while another said "In the Democratic Republic of Congo, overnight you can lose your rights in a completely arbitrary or generally corrupt environment".

Fraser Institute: Survey of Mining Jurisdictions

South Africa: sub-rankings			2011	2010
Uncertainty concerning the administration, interpretation,
and enforcement of existing regulations			60	51
Uncertainty concerning environmental regulations			36	23
Regulatory duplication and inconsistencies			59	42
Legal processes that are fair, transparent,
non-corrupt, timely, and efficiently administered			62	NA
Taxation regime			65	55
Uncertainty concerning disputed land claims			64	25
Uncertainty concerning which areas will be protected
as wilderness areas, parks or archeological sites			45	25
Infrastructure (includes access to roads, power availability, etc)			45	37
Socioeconomic agreements/community development conditions			66	60
Trade barriers-tariff and non-tariff barriers,				NA
restrictions on profit repatriation, currency restrictions, etc			70	NA
Political stability			61	58
Labor regulations, employment agreements, and
labour militancy or work disruptions			76	69
Geological database			49	35
Security			68	62
Supply of labor/skills			58	43
Growing (or lessening) uncertainty
in mining policy and implementation			71	NA
Composite policy and mineral potential			60	58

Source