AMN - What a Trump presidency means for South Africa’s future - comment by Yolanda Torrisi

A new era of world politics is unfolding and at the centre of the new world order is US president elect Donald Trump. Flamboyant, outspoken, colourful and unpredictable. The adage … ‘only in America’ couldn’t be more true.

What this means for the rest of the world remains to be seen. For South Africa, it may not have positive implications for an already struggling mining industry.

I have noted the comments made by Hogan Lovells partner Wessel Badenhorst which hold merit in this new world order.

On 9 November, America woke up to the reality that Donald Trump would be the next president.

World markets reacted as one would expect, reflecting the uncertainty surrounding Donald Trump’s economic and geopolitical views.

The election campaign was one of the most controversial and personal election campaigns in the history of election campaigns. Donald Trump campaigned on a platform of investigating trade treaties and uncovering trade violations. It is likely that the new president elect will investigate China’s currency manipulation and investigate China’s investment practices.

It appears that the president elect may order the FBI to enforce the foreign corrupt practices act. All of this leads to uncertainty and markets dislike uncertainty.

Mining is important to South Africa. It is labour intensive and it also attracts a large cottage industry that encourages entrepreneurial businesses to set up in mining areas.

It has the ability to improve socio economic and living conditions for ordinary South Africans, and it is a great source of foreign currency.

South Africa has identified with China as a trade partner and China is being courted to invest in the South African mining industry, as well as down-stream beneficiation and manufacturing. 

Wessel Badenhorst says South Africa is firmly part of BRICS and the only African country to have attended the G20 summit in China earlier this year. There is a risk that this relationship may be at odds with potential US foreign policy objectives.

Although a weaker Rand makes investment notionally cheaper, exports of mining commodities are all US dollar based. A weakening Rand deteriorates real profits and makes investment more uncertain and unstable.

At a time when the storm clouds are thickening for the South African mining industry, it now does not look like the next four years will be any easier. We will have to look creatively at funding, investment and the development of our commodity based economy, Wessel Badenhorst says.

Yolanda Torrisi is Chairperson of The African Mining Network and comments on African mining issues and the growing global interest in the African continent. Contact:yolanda@yolandatorrisi.com