Earlier in the year, we heard comments from Mines Minister Susan Shabangu that Mining would again become a thriving sector in South Africa within the next five to ten years. In addition, the International Monetary Fund (IMF) forecasted that African countries would take seven of the top 10 places in the world mining industries over the next five years. What is the future for South African mines?
If there is one thing mining companies hate it's uncertainty. They are investing millions if not billions of dollars into long-term projects and they need to know those investments are safe. Without that certainty, the chances of fresh mining investments by serious players are slim.
The local industry was negatively affected by the on-going nationalisation debate, the rising costs of inputs like electricity and labour, and the concerns over licensing and ownership. This in a global market already deeply spooked by the economic meltdown and with investment dollars hard to come by if there is a perception of risk; is not the way to ensure a thriving industry.
The views on nationalisation vary from “South Africa’s mines are already fully nationalised as all minerals belong to the state” to “it could never happen”.
"In Zambia for example, the mines were nationalised and mismanaged and have never recovered. Even now that the private sector has been invited back in, it's very slow going to get these mines to anything like they were," said Chris Hart, an economist at Investment Solutions.
“When it comes to this debate, there are risks associated with the future government policies and such perceptions are very high and could be more severe than other issues in other countries.” Mike Elliot, global mining and metals leader at Ernst & Young said.
Despite the opposing views on the matter, there appears to be a unified view that the mineral wealth of the country should benefit its citizens. So what is the future of the mining industry in South Africa? How is it going to impact mining jobs? Share with us your thoughts on this subject?
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