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Corruption erodes investment opportunities - mining CEO

Oct 05 2016 20:30
Lameez Omarjee

Johannesburg – To attract investment, mining companies can build a solid business, however, investors are most perturbed by corruption.

This is according to Steve Phiri, CEO of Royal Bafokeng Platinum, who was speaking at the Joburg Indaba, held in Sandton on Wednesday. Phiri was part of a panel discussion with CEOs Neal Froneman of Sibanye Gold, Chris Griffith of Anglo American Platinum and Nick Holland of Gold Fields.

“If you do not have a good relationship with government and a sustainable regulatory environment, investors run fast from you,” said Phiri. He explained that investors are concerned when they see “morality collapsing”. “People are concerned if their investment is not protected and safe.”

Phiri said that during roadshows, CEOs are often asked about corruption, for the wrong reasons such as when key political figures are implicated when one family and one company is made use of all the time. It is likely that he was referring to the close relationship between the Gupta family and the president.

READ: Gordhan met Gupta-owned Oakbay on banks 4 months ago

Froneman added that governance was an important aspect in attracting investment. He said that when issues are not addressed, it inhibits investment. “We can’t get investors to invest when [state] governance is questionable. They think we run companies the same way.”

“Business can only really work if you have good corporate governance and we are not setting good examples regarding governance in the country and it reflects on business,” he told Fin24. He said that there would be a better investment climate if there was improved governance by the state.

AUDIO: Sibanye Gold CEO Neal Froneman on what it takes to boost investment

Andile Sangqu, vice president of the chamber of mines in South Africa said that the competitiveness of the sector is multi-faceted and that there were other factors to address, besides political stability and perceptions of corruption.

“Mining is a long-term game,” he explained. Investors may take a 20- to 30-year view so it is important not to change the rules midway, as this may impact returns they hope to generate.

READ: Pityana: Zuma's removal will boost the economy

Not being able to overcome present challenges will not necessarily detract investment potential. “There is still potential, we have good people in the country, good geology and good technology,” he said. “There are some resources in South Africa which are not available anywhere else in the world.”

Sangqu said that although it was not always in the public domain, companies are engaging with government. “We are hopeful and optimistic that things will change and good will come.”

He added that policy and regulatory certainty was important. “It is difficult to attract investors where the policy regime or regulatory framework has not been fully established and clarified.”

ALSO READ: Manuel: Corruption, non-compliance dogging SA mining

It is also important to engage with communities and provide them with opportunities, he said. Phiri shared the same view, saying that solidity in community relations, management and labour relations were key. 

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