By Jinghe Chen
It’s no secret that mining is a big business in South Africa. According to the Minerals Council South Africa, mining produced 878 billion rand ($50 billion) in exports, employed around 476,000 people, and contributed 4% of the country’s GDP in 2022.
Yet, in the year ending in November 2022, according to the most recent StatsSA data, South Africa’s mining output decreased by 9% year over year, making it the country’s fifth consecutive year of decreasing mining output. To add salt to the wound, it fell to its lowest-ever ranking for mining investment attractiveness in the same year.
Mines in the country are facing increasing challenges amidst a perfect storm of weakening business climates, failing infrastructure, regulatory bottlenecks, and a growing need for more investment and jobs.
The differences of the business climates to other mines in Africa are startling. The Kolwezi Copper Mine in the DRC was the first copper mine constructed by Zijin and put into operation abroad.
The investment was made in 2014 and the mine officially launched 3 (three) years later in 2017.
Since then, Kolwezi has produced over 529 800 tonnes of copper, providing more than 2 000 jobs for local people. Taxes and dues contributions from the mine amounted to over USD1 000 million.
Another DRC mine, the Kamoa-Kakula Mining Complex or known as “Kamoa Copper”, is a joint venture between the Zijin Mining Group, Ivanhoe Mines, Crystal River Global Limited, and the DRC Government, and is anticipated to become the second largest copper mine in the world in the near future.
The investment was made in 2015 and the partnership was sealed in 2016.
Following “carbon peak and carbon neutrality” initiatives, Kamoa Copper implemented the Sustainable Livelihoods Program and set a net-zero GHG emission target for operation. Kamoa Copper is powered by clean and renewable energy with its main power source coming from a hydropower plant and a hydropower facility. Total taxes and dues contributions to date: Over USD 600 million
Then there is the Bisha Zinc-Copper Mine in the State of Eritrea with a total taxes and dues contribution of approximately USD 300million. The investment was made in 2019 and after which, it soon went into production. It has become one of the largest-producing zinc mines in Africa with a mining and stripping capacity of 32 million tonnes per year, and a processing capacity designed to produce more than 2.4 million tonnes per year.
In South Africa, Zijin first invested in the Garatau project in Limpopo in 2014. According to the Feasibility Study, the processing capacity of Garatau is anticipated to average 5.4 million tonnes of ore per annum once full capacity is achieved in a few years’ time. The life of mine is estimated to be in excess of 29 years and once fully operational, it has an intention of employing some 2500 people.
However, the mine was only able to begin surface development 7 (seven) years later. Navigating through the maze of regulatory challenges was possibly one of the major contributing factors the mine’s stagnation.
With the DRC and Eritrea mines succeeding and thriving even before the Garatau project could launch, nostalgia hits as it takes us back on our first earnest step onto the African continent, with our initial investment in the Garatau project in 2014. It’s not difficult to imagine the mine would have already provided job opportunities and contributed to economic growth, if only it could have started operations earlier, with adequate support received from stakeholders and regulatory authorities at the time.
For investments to thrive and be sustainable in South Africa, it will be crucial to lower entry barriers, advance economic reforms to enhance the business climate, combat infrastructure damage, enhance the regulatory environment and encourage competition.
Improvements to these issues will inevitably generate much-needed jobs, and guarantee stronger, more sustainable, and more inclusive growth for all.
But it seems hope never strays too far. According to findings of Brand South Africa’s 2022 Global Reputation Study, it demonstrates that South Africa is still at the top of investors’ and exporters’ minds in 13 different markets around the world.
59% of respondents said they would invest in the nation from an investment standpoint, while 75% said they would do business with South Africa. These feelings are directly related to South Africa’s reputation for being a business-friendly nation with low operating costs, enticing regulations, and a thriving entrepreneurial scene. The report also shows that natural resources are the key factors influencing foreign investment and export reputation, which speaks highly of the country’s mining industry’s strength and calibre.
The mining industry in South Africa is the biggest, most diverse, and most established in all of Africa. South Africa has accumulated significant knowledge in the mining and mining-related supply industries and is home to numerous businesses at the cutting-edge of technology.
The industry still has the potential to become, once again, the main driving force behind the development of Africa’s most advanced and richest economy.
Given the country’s economic standing as currently the world’s largest PGM producer, its significant role in Africa, and especially the challenges that international investors may face in South Africa, then to a certain extent, mining success in other parts of Africa is not true success.
Only when there is success in South Africa, would this mean true mining success in Africa.
Chen is Chairman of the Zijin Mining Group