WATCH | Policy malaise tightens impossible investment windows, Jonas laments

South Africa cannot ignore the investment opportunities that exist within its mining sector. Still, the country urgently needs decisive and uncompromising policies aimed at drawing meaningful investment towards the struggling industry.

This is according to Mcebisi Jonas, special investment envoy to President Cyril Ramaphosa. Speaking on the sidelines of the Investing in African Mining Indaba on Monday evening, Jonas said time was of the essence when it came to drawing investment in the SA mining sector.

“We need a new settlement, almost a political settlement, between the mining industry, the state, the finance institutions and mining communities. We can tweak the debate around this or that. The reality of the matter is that the scale of what we need to do … requires stability over a long period. We can only have that if there is certainty, if there is a compact between key players.”

Jonas was speaking at an event to promote investment in the Northern Cape’s resource economy, which was also attended by Northern Cape Premier Zamani Saul and officials from Transnet, the Public Investment Corporation and Ninety One.

Jonas said while considerable investment potential remained in the SA mining industry, investment windows continued to narrow and these windows were further tightened by a failure to be speedily decisive on policy and implement.

“This is a long-term journey that we have to travel. The danger, of course, with that position is that we don’t realise that there is an opportunity cost. If we fail to act with speed, it will cost us later. And that’s the challenge that we face.”

He noted that the Northern Cape had largely untapped investment potential in areas such as green hydrogen, where the province had the potential to make South Africa a significant player in the market, in the order of Namibia.

“Our policy and planning cycle is too long. Co-ordination of policy is also still very confusing. Institutional execution of some of these projects we are talking about remains problematic. It’s a big challenge that we have.”

Jonas said there was a danger with the gaps in policy windows and the planning cycle as, over the years, opportunities arose to capitalise on South Africa’s strengths as a mining sector.

“Some of the things that we’re grappling with today, about private sector participation and all of these issues around partnerships between the private sector and the state, and dealing with ownership and operationalisation of these partnerships, are things that we have debated, probably, for the last 15, 20, if not 30 years. But execution is a problem.”

Saul said the Northern Cape remained a “hidden treasure with vast land, industrial resources and economic potential”, and he urged investors to deepen their presence in the province, which is South Africa’s largest in terms of land mass but has the smallest population.

“All those companies that have invested in renewables, I can tell you that up to 80% of their offices are in Cape Town and their addresses are in Cape Town. It does not represent the actual economic contribution that we make to the country.”

The premier said that of the total R240bn in active investments in renewable energy in SA, 60% of this was in the Northern Cape. However, the companies that made these investments were headquartered in provinces like Gauteng or the Western Cape.

“We are not just a province on the periphery. We are key to the wealth and wellbeing of this country. The Northern Cape is a key source of energy and mineral resources … The Northern Cape provides the country with unprecedented opportunity to be a new growth front.”

Minister of mineral and petroleum resources Gwede Mantashe told reporters during a briefing earlier in the day that while ferrochrome operators called for cheaper electricity to balance out their costs and revenue potential, the sector has to “meet government halfway” in its efforts to respond to price pressures.

“Electricity prices and ferroalloys … is a contradictory situation in that ferroalloys think that to make money, they depend on electricity. And my argument is that, yes, electricity is a very important factor, but the top-class skills of top-class managers managing ferroalloys is the deciding factor.

“The minister of electricity has cut the tariff to ferroalloys and heavy minerals by half. It’s not yet at the level where the industry wants it to be, but the industry must meet us halfway long-term by doing something extra and doing more with less. But there is an effort to correct that situation.”

Just hours before Mantashe’s briefing, Minerals Council CEO Mzila Mthenjane stressed that electricity prices were placing pressure on mining operators, including ferrochrome operators, to the point where furnaces were not being deployed due to high costs.