AMN - Mining policy reforms gain traction – comment by Yolanda Torrisi

South Africa has regained ground on the business confidence front after its reforms transformed its mining policy attractiveness ranking to higher levels of confidence. The Fraser Institute’s Annual Survey of Mining Companies has also seen South Africa improve its overall investment appeal.

South Africa was ranked 56 out of 83 mining jurisdictions for policy attractiveness in the annual survey published last week. This ranking returned the company’s mining regime to a position last seen before the appointment of controversial mineral resources minister Mosebenzi Zwane, when his predecessor Ngoako Ramatlhodi was the nation’s mines minister.

South Africa’s result was a turnaround on its number 81 ranking for 2017 among the 91 countries assessed in last year’s survey.

The country’s overall investment attractiveness index for 2018 improved marginally to 43 out of 83 jurisdictions for 2018 from 48 out of 91 for 2017.

The results of the electronic survey just go to show real and committed government reforms make a difference to the mining industry’s assessment of jurisdictions, projects and that ever-present factor, sovereign risk.

Herbert Smith Freehills partner Peter Leon has described the improvement as “commendable and largely encouraging” but rightly called for more to be done to attract investment.

“The improved performance is certainly owing to government’s decisions to withdraw the Mineral and Petroleum Resources Development Amendment Bill and the publication of Mining Charter III,” Leon said. “While both actions have instilled the mining sector with some certainty, South Africa will continue to perform poorly until the issues surrounding the bill, the charter and general administration of the Department of Mineral Resources are resolved.”

Like many, Leon believes the formal withdrawal of the bill is needed along with changes to a few clauses in the mining charter. He also wants to see a Botswana-style beefing up of the Mineral and Petroleum Resources Development Act, 2002 to increase the predictability of how it's interpreted and implemented.

Botswana continued to turn heads with its policy offerings last year. The country was again the highest ranked jurisdiction in Africa on policy, placing 12 among the 83 countries, up from 21^st in 2017. As far as investment attractiveness is concerned, Botswana ranked 32nd out of 83, up from 43rd in 2017.

On the investment rankings Zambia improved 13 places to 45^th, Mali dropped 25 places to 50^th, Namibia fell six places to 60^th, Zimbabwe rose to 62^nd from 66^th, Tanzania was 13 places higher in 66^th, the DRC dropped 16 spots to 67^th, Ghana fell a staggering 46 places to 68^th and Ethiopia was four places better at 77^th.

On the policy index Namibia was second best in Africa at 36, an improvement of three; Zambia was at 53 (71 in 2017), Ghana at 60 (51), Mali at 63 (46), Tanzania at 66 (78), Ethiopia at 71 (64), Zimbabwe at 76 (89) and DRC at 82 (87),

Respondents to the survey that went out electronically to 2,600 people consistently indicated about 40 per cent of their investment decisions generally were determined by policy factors.

The importance of good policy can’t be understated. In the modern worldwide investment climate, it is important that governments write good policy and make much-needed changes to regulatory reforms before they hamper business confidence.

As an industry we must carefully and effectively lobby government to introduce sensible reforms and make any necessary adjustments to planned policies and legislation.

Our efforts to develop wealth-creating projects to help build Africa’s economies must be supported by the continent’s governments as they set vital mining policies that help create jobs.

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