Ramaphosa’s election likely to spark economic growth: mining expert
Newly-elected President Cyril Ramaphosa will on Friday deliver a State of the Nation Address that will hopefully set the country on a sustainable trajectory of economic growth‚ with the mining sector set to play a significant part.
In a speech to the British Chamber of Business in South Africa on Thursday evening‚ Peter Leon‚ partner and Africa co-chair of law firm Herbert Smith Freehills‚ said the problem the mining industry had faced since 1994 had been the change in how mineral rights were owned.
He said before then‚ ownership of minerals was vested in the owner of mineral rights who had the right to exploit them.
This changed in May 2004 when the Mineral and Petroleum Resources Development Act (MPRDA) of 2002 came into effect‚ which resulted in the state becoming the “custodian” of all minerals.
Leon said the MPRDA failed to prescribe objective timelines for the exercise of licensing powers by either the minister of mineral resources or the Department of Mineral Resources‚ leaving much to their interpretation and discretion.
“This in turn has led to a climate of inconsistency as much as regulatory uncertainty. As a result‚ investor confidence waned‚” Leon said.
Leon said the National Development Plan (NDP)‚ which was prepared over three years by a diverse group of policymakers and in which Ramaphosa played a key role‚ offered a sober assessment of the shortcomings in the South African mining industry.
The NDP is a policy document of the government from 2012 which contains a series of proposals to eliminate poverty and grow the economy by 2030.
The NDP found that during the commodity boom from 2001 to 2008‚ the mining industry in SA shrank by 1% per year‚ as compared to an average growth of 5% per annum in the top 20 mining exporting countries.
The NDP found that the central constraints hindering growth in the sector included uncertainty in the regulatory framework and property rights‚ Leon said.
To reverse this trend‚ the NDP recommended that major constraints impeding accelerated growth and development of the mining sector should be addressed.
The main interventions included ensuring certainty in respect of property rights; passing amendments to the MPRDA to ensure a predictable‚ competitive and stable mining regulatory framework.
Leon said the Mining Charter and the bill to amend the MPRDA had worsened regulatory uncertainty‚ which was anathema to investment in the industry.
“If the country’s mining sector is to have a future‚ this is the first issue that needs to be addressed.”
Leon said since his election as president of the ANC in December 2017‚ Ramaphosa had made a concerted effort to lure foreign investors back to South Africa.
He said under Ramaphosa’s leadership‚ the ANC stated in its 106th anniversary statement last month that the party’s vision was an economy that encouraged and welcomed investment‚ offered policy certainty and addressed barriers that inhibited growth and social inclusion.
“The election of Ramaphosa may signal a recommitment by the ANC to the NDP‚ which Ramaphosa had a large part in drafting‚ as deputy chair of the National Planning Commission.”
Leon said the ANC should prioritise the implementation of the NDP’s key proposals for minerals and metals.