• Caught in the debt trap?

    Help us help you by taking our second annual Debt survey and you could win R3 000.

  • Rich man, poor man

    Culture change from below is the only way to overcome poverty, says Leopold Scholtz.

  • Tech bubble talk

    After the tech euphoria of 2013, the fast-moving sector has hit a speed bump.

Data provided by McGregor BFA
All data is delayed
Loading...
See More

Indaba wallflower

Feb 10 2012 07:46 Reuters

Company Data

GOLD FIELDS LIMITED [JSE:GFI]

Last traded 43.51
Change 0.69
% Change 0.02
Cumulative volume 1693481
Market cap 33.70bn

Last Updated: 24/04/2014 at 04:29. Prices are delayed by 15 minutes. Source: McGregor BFA

Related Articles

Zuma: We're committed to mining sector

Burying nationalisation

ANC moots mining wealth fund to curb rand

Ivanplats vows shake up in SA platinum

Lonmin wary of targets as stoppages bite

Shabangu: Make CEOs liable for mine deaths

 

Cape Town - The industry executives who pile into Cape Town every year for the annual African mining conference love the sun, wine and stunning mountain backdrop the venue provides.

But South Africa’s once towering mining industry is no draw and investors flocking to the Indaba, as it is called, have their sights set on alluring prizes elsewhere on the continent.

Gold and diamonds built Africa’s largest economy, which also boasts 80% of the world’s platinum reserves, but outside investors remain wary of sinking money into an industry that appears in a state of terminal decline.

Soaring labour and power costs which are not matched by productivity gains, not to mention the world’s deepest shafts for those mining gold, are all making South Africa a treacherous place for miners who are finding less headaches elsewhere.

Political risk and policy uncertainty have also dampened the enthusiasm of an industry that must invest millions and even billions to build mines before it can recoup any profit.

“You look at any of the major mining companies and they are very happy to spend billions of dollars to develop mines and related infrastructure in countries like Mongolia, Indonesia and Guinea, and are willing to spend billions of dollars on acquisitions, and a multi-year investment programme in Mozambique,” said Adam Brett, a London-based investment banker with JPMorgan who focuses on mining.

“And just next door is South Africa. There are resources in South Africa, there are opportunities but frankly it is perceived to be easier to go to Asia, South America or indeed other parts of Africa,” he said.

South Africa reassured investors on one front this week by delivering a hammer blow to a nationalisation drive by radical elements within the ANC.

A study expected to become official ANC policy said nationalisation would be an “unmitigated disaster.” But it also proposed a “resource rent” that would effectively be a super tax of 50% on earnings.

“It is fairly clear nationalisation is not a way forward, and clearing that out of the system is a very good thing but it has raised various other areas of uncertainty... and any policy uncertainty for a business investor is not a good thing,” said Ian Farmer, chief executive of Lonmin, the world’s third-largest primary platinum producer.

Moving out

Platinum miners have little choice outside of South Africa because that is where the stuff is found, but others have far more choice.

At one of the lavish dinners put on for delegates, a senior mining executive said he feared South Africa was following the statist path taken by other African countries after they gained their independence from colonial rule.

But he praised other African mining states like Burkina Faso and Ivory Coast for opening their doors to mining investment.

Still, there are concerns in frontier Africa as a wave of resource nationalism surges across the region.

Nick Holland, chief executive of South African-based Gold Fields [JSE:GFI], the world’s fourth-biggest bullion producer, told Reuters that “resource nationalism is my number once concern at the moment”.

Holland said in December that looming tax changes in Ghana have put a question mark over $1bn in Gold Fields’ planned investments in the country, and told Reuters that his company remained in talks with the government about the issue.

South Africa does remain a mining gateway to the rest of Africa for both investment and manpower, with the continent drawing on the country’s executives and engineers to get projects off the ground and running.

Where there is a mine in Africa, you are bound to hear Afrikaans.

The chief executives driving the looming $90bn tie-up between commodities giant Glencore and miner Xstrata, Ivan Glasenberg and Mick Davis, are both South African-born.

 
sa economy  |  mining
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
4 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're Talking About: Small Business

Standard Bank is looking for 12 entrepreneurs to participate in a 10-part TV series. They could win a R1m investment into their dream.
 
 

Ramphele: ANC can be defeated

The African National Congress can be defeated, Agang SA leader Mamphela Ramphele has told supporters in Temba near Hammanskraal.

 
 

Latest elections multimedia

Watch what happened when we blindfolded Helen Zille and asked her to eat random things
13 days to elections - news you need to know
11 Julius Malema quotes you'll never forget
DA won't get 30% - Zille

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...