Policy and regulatory certainty in South Africa could potentially add R122 billion ($8 billion) in capital expenditure to the struggling mining sector over the next four years, the Minerals Council’s chief executive said on Thursday.
The mining industry in Africa‘s most industrialised economy is facing a wave of job cuts due to low global commodity demand, high wage costs and a volatile labour environment.
The sector is waiting for the latest version of the Mining Charter which contains regulations meant to redress imbalances of the nation’s past apartheid rule and stipulates rules for miners. The new rules could mean significantly higher taxes and levies on mining companies.
Uncertainty around the charter has deterred investment into a sector that accounts for 8% of gross domestic product in the world’s top platinum producer.
“The current mining capex for the next four years for South Africa is R145 billion. Potential new capital expenditure under a more certain and conducive environment would add a further R122 billion to this,” the Minerals Council’s CEO Roger Baxter said in a speech.
Baxter was addressing a mining conference in Australia, where he said South Africa had not reached its full mining potential over the past decade.
He said modelling at the Minerals Council showed that if South Africa returned into the top 25% of favoured mining destinations globally it would create an extra 200 000 jobs.
Earlier this month, mines minister Gwede Mantashe criticised Gold Fields’ plans to cut jobs and reduce costs in South Africa as taking the “easy way out”.