AMN - Africa more attractive to investors - comment by Yolanda Torrisi

While Zimbabwe and Mozambique ranked in the bottom 10 of the world’s most attractive jurisdictions for mining investment, the Fraser Institute ‘Annual Survey of Mining Companies 2016’, shows that the continent is looking better for investors and ranks ahead of Oceania, Asia, Latin America and the Caribbean, and Argentina in investment attractiveness.

The survey ranks 104 jurisdictions around the world based on geologic attractiveness and the extent to which government policies encourage or deter exploration and investment.

It attributes the more positive sentiment toward mining on the continent to an improvement of the median score on policy factors in 2016. This was also the case for Africa’s median investment attractiveness score.

However, the continent’s traditional mining powerhouse South Africa scored poorly on the policy perception index (PPI), at 47.5 points, ranking only above South Sudan and Zimbabwe.

South Africa’s score of 53.62 on the investment attractiveness index was down from 58.04 in the previous year, ranking it 74th globally. It ranked ahead of Zimbabwe, however, with a score of 41.84, Mozambique with 41.87 and Sierra Leone with 46.26.

The survey’s author said, “The environment in South Africa is not predictable. Before the courts is a decision regarding local ownership in accordance with the existing Black Economic Empowerment (BEE) policy. Once deemed BEE compliant, shareholdings are being sold. Government takes the position that companies must remain BEE compliant by issuing new shares. There is a grave risk to ownership with the government’s record on passing and then modifying laws to achieve its policy goals.”

Africa’s top performers included Côte d'Ivoire at 17, Botswana at 19 and Ghana at 22.

“Botswana’s higher PPI score of 77.62, compared with 68.32 in 2015 reflects decreased concerns over labour regulations, the availability of labour and skills and infrastructure,” the survey stated.

The DRC recorded the continent’s biggest improvement based on miners’ perceptions of policy, with an improvement of 17 points, enabling it to move up to 70 from 87 in 2015.

Namibia’s score and rank deteriorated for the second straight year. In 2014, it was ranked as the world’s 19th most attractive jurisdiction when only policies were considered but dropped to 29 in 2015 and 38 in 2016.

“A draft policy of local previously disadvantaged persons is being circulated. It models itself after South Africa, which has clearly failed in its broad-based objectives. There is great danger to all existing or new companies in Namibia,” the authors said.

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