Cape Town - Despite improved performance in 2017 and rising commodity prices, mining remains under pressure due to high operating costs and persistent policy uncertainty, according to the Budget Review.
The main risks relate to the Mining Charter and the Mineral and Petroleum Resources Development Amendment Bill, which was sent back to Parliament in January 2015. The bill's status has not been resolved.
The Mining Charter, approved by Cabinet and gazetted in June 2017, has contributed to policy uncertainty, the review admits.
“Both the charter and the outstanding amendment bill leave mining, oil and gas companies unable to accurately assess the expected return on their investments,” it states.
According to the Fraser Institute’s Mining Investment Attractiveness Index, South Africa ranked 74th out of 104 jurisdictions in 2016. The country is currently ranked 13th in Africa.
Botswana, Ghana, Namibia, Tanzania and Uganda have more favourable mining policy environments than South Africa.
Real fixed investment in mining has been stagnant since 2008.
As a result, growth in the volume of production of South Africa’s key commodities, including iron ore, coal, gold and platinum, has underperformed compared to countries such as Chile, China, Canada, Australia and Russia.
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