Wed, Feb 08, 2023 page10

• S Africa hit by halt in investment: top mine employer

  • Bloomberg
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  Investors have lost faith in South Africa’s government and have stopped investment despite a wealth of opportunities, the head of the country’s biggest employer in the crucial mining industry said.

  More than 200 days of power cuts last year and blackouts every day so far this year have dented confidence, as has the poor performance of the state transport utility and a plethora of other problems.

  Pledges to enact reforms to spur the economy have come to little, Sibanye Stillwater Ltd chief executive officer Neal Froneman said.

  

  South African President Cyril Ramaphosa delivers the keynote address at the Investing in African Mining Indaba in Cape Town yesterday.

  Photo: Reuters

  “There is much more that we can invest in and the rest of South African businesses can invest in if the climate was different, if we had power, if we had clear policies and if it was more environmentally friendly,” Froneman said in an interview last week. “Business investment in South Africa is on strike until things improve.”

  Corruption, crime and mixed messages from government ministers as to how quickly the country is to transition to cleaner energy has also drawn criticism from a range of business leaders. Investment has been confined mainly to keeping existing businesses running rather than expanding their operations.

  Mining accounted for 4 percent of GDP last year, employed about 476,000 people and generated 878 billion rands (US$49.7 billion) of exports, said Minerals Council South Africa, a lobby group representing most mining groups operating in the country.

  Largely as a result of the problems Froneman laid out, economic growth is anemic with economists surveyed by Bloomberg forecasting an expansion of 1.2 percent this year.

  At 32.9 percent, unemployment is among the highest across more than 80 countries tracked by Bloomberg.

  “Investors are very negatively disposed toward South Africa,” Froneman said. “They’ve lost faith and they’ve lost trust in the government.”

  Mining companies, among the nation’s biggest electricity users, are scaling down some activities. The outages probably cut South Africa’s output for platinum-group metals by 10 percent last year, and this year production could fall by one-fifth, Froneman said.

  South Africa accounts for about 70 percent of the world’s platinum output and almost 40 percent of all palladium, metals that are used in auto-catalysts that curb vehicle emissions.

  The challenges at national power utility, Eskom Holdings SOC Ltd, and state-owned rail and logistics company, Transnet SOC Ltd, are unlikely to be resolved soon, Froneman said.

  Coal arrivals at the main export port collapsed to a 30-year low last year, because of Transnet’s poor performance and have fallen even further this year, people familiar with the situation said.

  Minerals Council South Africa in December last year demanded that Transnet management be removed, South Africa’s News24 reported, citing a letter sent by the group to the company’s chairman.

  Transnet and Minerals Council South Africa have declined to comment on the letter.

  “All the trajectories are down,” Froneman said, referring to Transnet’s faltering performance. “You don’t see anything turning. I completely support the minerals council’s approach.”

  His concerns were echoed by Duncan Wanblad, the chief executive officer of Anglo American PLC, in a speech at the Investing in African Mining Indaba in Cape Town, which started on Monday. Anglo owns iron ore, platinum and diamond operations in South Africa.

  “Corruption — and the crime that stems from it — are a cancer eating away at the entire economy on a horrific scale,” he said. “Progress made in energy provision was so late in the day that the system had already failed.”

  The poor performance of the economy could cost the ruling African National Congress power in next year’s general elections if it continues to “act in the party’s interest instead of the national interest,” Froneman said.

  “They engage, but they are unable to implement any of the things that are necessary to change this,” he said. “They will tell us what we want to hear, but I don’t believe they are sincere in making a difference.”
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