The mining industry in South Africa has been portrayed in a negative light in the Fraser Institute’s annual survey of mining companies.
The 2022 report has revealed the country’s dismal performance, with a ranking at the bottom among 62 countries.
The purpose of the survey was to assess the effect of mineral resources and public policies, including taxation and regulatory ambiguity on exploration investment.
From August 23 to December 30 2022, the survey gathered input from more than 1 900 individuals, resulting in 180 responses that were adequate to evaluate 62 jurisdictions.
“An overall Investment Attractiveness Index is constructed by combining the Best Practices Mineral Potential Index, which rates regions based on their geologic attractiveness, and the Policy Perception Index, a composite index that measures the effects of government policy on attitudes toward exploration investment,” the Fraser Institute stated.
“While it is useful to measure the attractiveness of a jurisdiction based on policy factors such as onerous regulations, taxation levels, the quality of infrastructure, and the other policy-related questions that respondents answered, the Policy Perception Index alone does not recognize the fact that investment decisions are often to a considerable extent based on the pure mineral potential of a jurisdiction.”
The Fraser Institute attributes South Africa’s poor ranking to factors like inadequate mining infrastructure, burdensome ownership requirements, and unfavorable regulation.
The country’s rating has been steadily declining over the past four years, signaling a concerning trend.
The report highlights significant challenges faced by the mining industry in South Africa, particularly regarding the exploration and extraction of minerals.
The presence of illegal miners, referred to as zama zamas, is also a significant hindrance to industry.
These miners, who are mainly immigrants from Lesotho, Zimbabwe, and Mozambique, use closed mineshafts as access points to illegally extract gold and other minerals, posing a severe problem.
Reacting to the survey report, DA MP James Lorimer expressed disappointment, stating that the opposition party will continue to advocate for mining regulation that frees the industry to reach its full potential and bring prosperity to the people of South Africa.
He said the Fraser Institute’s report highlights the need for government to address the challenges facing the mining industry to attract investment and stimulate economic growth.
“Investors are reported to have said they’re concerned about poor mining infrastructure, bad regulation and onerous ownership requirements.
“The country’s rating has fallen, and it continues to languish near the bottom,” he said.
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